Pick of the Day: GBP/USD – Close Trade

Close Trade: 2008-02-12 23:24

Since my last update, Cable has moved back lower below our short entry price, but not by much. With UK event risk coming up, I’d like to close out our position and move on to our next opportunity.

Close open GBP/USD position at market price (1.9585)

Total: +10 pips/ +.14%

We have the BOE Inflation report later today, and with yesterday’s CPI read showing higher inflation, Cable may rise in the short term.

Stay tuned for a new trade idea tonight. See ya!

Trade Update: 2008-02-12 11:56

Our short trade was triggered late in the Euro/US trading session overlap as we saw a broad US Dollar selloff. UK CPI came out slightly weaker than expected with the headline number read at 2.2% vs. 2.3% forecasted. Cable spiked lower before finding support at 1.9450 and rallying up to our short order just below 1.9600.

The pair found temporary resistance at 1.9600, but is now currently holding above that level. I will continue to hold this position until the end of the US trading session to see if we can grab an end of day reversal. Stay tuned and good luck!

Trade Idea: 2008-02-11 23:59

The big economic event for the European trading session is the UK CPI data. The markets are speculating a stronger number with a forecast of about 2.3% versus the previous read at 2.1%. We may see Cable rally if we do see a stronger number, but I think sellers are waiting patiently to jump back into the downtrend.

The counter trend rally was a bit weak showing the lack of conviction in the buyers, so I am pretty confident we will see sellers jump in if the pair spikes higher. I look to step in front of the 1.96 handle as I look to fade any strong moves higher on news.

Short GBP/USD at 1.9595, stop at 1.9670, pt1 at 1.9505, pt2 at 1.9405

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

Good luck and good trading!

  • Inflatormouse

    Hi Pipcrawler,

    I’m curious to know your thought process when you picked 1.96 as your target. You pretty much hit it on the nose. I’m just beginning to learn about currency trading, and I much prefer to make educated “bets” on the market then step back and see how they develop (as opposed to staying glued to the screen tick by tick).

    Cheers,
    Ben

  • Pipcrawler

    Hey, Inflatormouse. 1.96 is right around the 50% Fib retracement level of the move from 1.98 down to 1.94. In my view, there is a higher probability of resistance on Fib retracements, especially if the play around psychological levels like 00’s. Unfortunately, it looks like traders are more interested in buying than selling as momentum to the upside was strong today. We may see Cable move up to 1.97/1.98 before finding meaningful resistance…

  • dmc4911

    Hey pipcrawler I didn’t recieve todays pick until you posted the updates any reasons why

  • Inflatormouse

    Hi Pipcrawler,

    I’m curious to know your thought process when you picked 1.96 as your target. You pretty much hit it on the nose. I’m just beginning to learn about currency trading, and I much prefer to make educated “bets” on the market then step back and see how they develop (as opposed to staying glued to the screen tick by tick).

    Cheers,
    Ben

  • Pipcrawler

    Hey, Inflatormouse. 1.96 is right around the 50% Fib retracement level of the move from 1.98 down to 1.94. In my view, there is a higher probability of resistance on Fib retracements, especially if the play around psychological levels like 00’s. Unfortunately, it looks like traders are more interested in buying than selling as momentum to the upside was strong today. We may see Cable move up to 1.97/1.98 before finding meaningful resistance…

  • dmc4911

    Hey pipcrawler I didn’t recieve todays pick until you posted the updates any reasons why