Pick of the Day: GBP/USD – Trade Closed

Trade Close: 2007-08-23 10:00

Well, it looks like a return to risk as higher yielding assets rallied against low yielding assets during the morning European trading session.

Cable rallied from the beginning of the European trading session, enough to trigger our short play at 2.0000. Unfortunately, it didn’t stop until 2.01 which means we were stopped out…dohhh!!!

Total: -50 pips

It looks like risk appetites are returning to the currency and equities markets, but how long will it last?? We will just have to wait and see. Stay tuned for the next pick!

Trade Idea: 2007-08-22 22:00

PoD Chart

Good evening! We have a potential, short-term technical play coming up in GBP/USD.

On the chart, we can see the 240 MA’s trending lower, showing price momentum is to the downside and that this retracement could be an opportunity to jump in at a great price. Stochastics are also showing the pair is overbought.

Fundamentally, Cable has risen as global risk appetites rise again, and on the possibility that we may see rates continue to rise in the UK. Also, there is speculation that the Fed may cut rates in the US, which would be very bad for the Greenback.

With that said, let’s remember that a rate hike in the UK and a rate cut in the US is all speculation and may or may not happen. The current environment is telling me that investors/traders are going to be risk averse for the time being and that we may eventually see a return to the Dollar as a safe haven.

So, we will short Cable if it reaches the 2.00 level to play a longer term view.

Short GBP/USD at 2.0000, stop at 2.0050, pt1 at 1.9950, pt2 at 1.9900

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

  • swordofrue

    Hey Crawler,
    I think a short on cable at this point would be too risky. An obvious counter-trend trade. If it breaks the 50 fib I think it will just keep on going.

    Will see how it goes, I am also long bias eur which I am currently in a trade with :)

  • swordofrue

    Hey Crawler,
    I think a short on cable at this point would be too risky. An obvious counter-trend trade. If it breaks the 50 fib I think it will just keep on going.

    Will see how it goes, I am also long bias eur which I am currently in a trade with :)

  • FXToro

    Hey Crawler, swordofrue is right, by now you may have been stopped out. But I believe if you are looking at stochastics, you can also look at the daily chart for this pair and use the parabolic SAR indicator. Currently it shows a reverse momentum for this pair. Currently if you were long on this pair right now you can still recover that loss. I came in long last nite at 1.9919 with a stop of 1.9850 and tp 1 at 2.0000 and tp2 2.0050. It broke both these levels. Tell me what you think

  • Pipcrawler

    You guys were right. I was taking a contrarian view to the current market environment in hopes we may see risk aversion take over the markets once again. It was a gamble, I lost, and so I move on to the next trade… :) Glod to hear you guys made pips on your own analysis!!

  • FXToro

    Hey Crawler, swordofrue is right, by now you may have been stopped out. But I believe if you are looking at stochastics, you can also look at the daily chart for this pair and use the parabolic SAR indicator. Currently it shows a reverse momentum for this pair. Currently if you were long on this pair right now you can still recover that loss. I came in long last nite at 1.9919 with a stop of 1.9850 and tp 1 at 2.0000 and tp2 2.0050. It broke both these levels. Tell me what you think

  • Pipcrawler

    You guys were right. I was taking a contrarian view to the current market environment in hopes we may see risk aversion take over the markets once again. It was a gamble, I lost, and so I move on to the next trade… :) Glod to hear you guys made pips on your own analysis!!