Pick of the Day: GBP/USD – Trade Closed

Trade Closed

Closed out at a loss of -81 pips as Cable spiked higher on Dollar sell off.

Total: -81 pips

Trade Update: 2007-09-27 19:20

Since we opened our short position on Cable, the pair has been on a roller coaster ride as it dropped down to 2.01, and then rallied up to 2.02 before trading just below our entry price – currently at 2.0152.

I still like a short in this pair for now, but we will see more economic data out of the US tomorrow with GDP, GDP Deflator, and New Homes Sales coming out in the morning US trading session. All of these events have the potential for pushing Cable to the upside as bad news is expected.

So, until then we will continue to watch, but be ready to adjust stops quickly or even close out our trade manually. Stay tuned and good luck!

Trade Idea: 2007-09-25 23:19

PoD Chart

With market sentiment pricing in the possibility of the Pound dropping on as the bank lending crisis in the UK may hurt growth.

It looks as if this may be pricing into the market as we speak. We can see a lower high (touched 2.0219) just formed on the 4 hour chart which almost lines up with the 61% Fibonacci retracement level.

We will short at the current market price of 2.0169 and target previous swing lows.

Short GBP/USD at market (2.0169), stop at 2.0250, pt1 at 2.0090, pt2 at 1.9950

Never risk more than 1% of your account on any single trade. Adjust position sizes accordingly.

We will adjust stop and profit targets as the trade goes along our way. Please be aware of UK GDP and Current Account, and the US Durable Goods data later today. Stay tuned for updates!

Good luck and good trading!