Pick of the Day: GBP/USD – Trade Closed

Trade Closed: 2007-07-17 07:32

Well, the market was expecting weak UK CPI data and what did we get? Strong data of course!

UK CPI headline came in at 2.4% versus 2.3%, and core came in at 2.0% versus 1.9%. The Retail Price Index also came in higher than expected at 4.4%.

So, bullish Cable data all around, and traders rode that bad boy over 80 pips to its current level around 2.0450.

We rode it as well as our trade was triggered at 2.0380, half our trade was closed at 2.04 and the rest was closed at 2.043. Closed all open GBP/USD orders.

1st half: +20 pips
2nd half: + 50 pips
Total: +70 pips

On a side note: I will hang out in the chatroom until 11:00 am EDT today. Come join me!

Trade Idea: 2007-07-17 00:27

PoD Chart

Good Evening! I though we’d start off the week by taking a look at the Cable and the upcoming UK CPI report at 4:30 am EDT.

Market expectations are for a lower read to bring inflation closer to the BOE target of 2.0%. If this is the case, we will probably see a drop in Cable as this pair has made a straight shot up, currently trading below the high of 2.0400. Profit taking will be in full effect. Of course, if inflation is still higher than what the Bank of England is looking for, then expectations of rates hiking to 6.00% will hold, and we may see a further rally in Cable.

Whatever the case may be, volatility may be momentary as the US is expecting inflation data of it’s own with PPI later today at 8:30 am EDT, and CPI tomorrow.

If we see a weaker inflation number, then I will look for an opportunity to sell, but with a tight profit target as we would be trading against the trend. On strong inflation, I will look to buy with a break to the upside, also with a tight profit target as volatility may quickly subside. In either case, I will limit my trades to half the normal position size due to the potential volatility of today’s events.

Long GBP/USD at 2.0380, stop at 2.0340, pt1 at 2.0400, pt2 at 2.0430

or

Short GBP/USD at 2.0330, stop at 2.0370, pt1 at 2.0310, pt2 at 2.0280

Remember to never risk more than 1% of your account on any single trade. Adjust position sizes accordingly!

Stay tuned for updates…Good luck and good trading!

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