Pick of the Day: GBP/USD - Trade Closed
Trade Closed: 2007-07-25 08:50
Cable rallied ahead of the European open to 2.06 before dropping 100 pips as the Greenback rallied against the majors.
Our long position was triggered at 2.0540, but was stopped out as momentum quickly took the pair to our tight stop loss.
Total: -30 pips
In retrospect, I probably should have set the stop to the usual 40 - 50 pips as this would have been below the psychological level 2.05. But I set the stop below the 76% Fibonacci which I also usually do, so I do not view it as a trading mistake. I just thought I'd do a mental review for my own benefit.
I am still long term bullish on the pair and I feel that we're just seeing profit taking at the moment. A correction is overdue as the pair has rallied about 1000 pips from last month. So, I will probably avoid long positions in Cable for now until it reaches 2.0000 - 2.0250.
Stay tuned for the next trade idea! :)
Trade Idea: 2007-07-25 00:21
Because of our "no entries" last week, I wanted to avoid Cable, but with a nice little Fibonacci setup how can I refuse?? :)
So, we are talking a look at GBP/USD. As we all know, the Pound has made a fantastic run against USD, so is it time for the pair to take a breather?? We all need breathers after fantastic runs, don't we?
Well, we might see it tonight as GBP/USD has traded lower. With interest rates in the UK expected to rise to 6%, we expect to see further buying until whenever, if ever, that announcement is made. But for now, risk aversion has gripped the markets and we've seen the pair trade off its highs to go back below 2.06. Great buying opportunity to jump in the long trend!
So, we will look to go long at the 61% Fibonacci retracement level and the previous resistance-turned-support level.
Long GBP/USD at 2.0540, stop at 2.510, pt1 at 2.0560, and pt2 at 2.600
Please remember to never risk more than 1% of your account on any single trade. Adjust position sizes accordingly.
We do have event risk with housing data out of both the US and UK later today. We will keep a watchful eye on that as markets are expecting more weak numbers from the US.
So, stay tuned for updates and good luck!
