Pick of the Day: GBP/USD - Close Trade
Close Trade: 2008-08-20 16:43
It's the end of the trading day and it looks like Cable isn't going to make a push lower anytime soon. I've decided to close my position and move on to green pastures.
Close open position at market (1.8618)
Total: +32 pips/ +0.21%
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Trade Update: 2008-08-20 10:57
Cable dropped as soon as the European markets began to open this morning, taking the pair down beyond 1.8600. The pair quickly found support at yesterday's low around 1.8550 and rallied into the morning US session. We're now seeing the pair drop once again as the Greenback rallies on a surprise rise in crude inventories. I am going to:
Adjust stop to breakeven to create a risk free trade, and continue to target 1.8500
Stay tuned!
Trade Idea: 2008-08-19 19:28
Cable is giving us a few technical signals that the momentum may continue in favor of further Greenback strength. Let's take a look, shall we??
I've got the one hour chart up and we can see a few classical chart patterns forming. First, there is a potential descending triangle pattern forming, and in a downtrend, this chart pattern indicates we may see a continuation if support is broken. And second, there is hidden bearish divergence as we see lower highs in price and higher highs on the stochastics (which happen to be in overbought territory as well). So, the technicals look good, how about the fundies?
The sentiment has been that the UK is starting to feel the credit crunch and slowing growth. Bank of England policy maker Tim Besley said inflation may fall by the end of next year, fueling the case for interest-rate cuts. The BOE Meeting Minutes is in the line up for release today, and if it shows there were more members who voted for a rate cut, we could see further selling in the Sterling. Of course, whether we see hawkish or dovish rhetoric accompany the vote makes a big difference as well.
So, with that in mind, I plan to short the pair with a wide stop to weather any potential volatility today's economic events may bring. I will:
Short half position on GBP/USD at 1.8650, stop at 1.8725, pt at 1.8500
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
I am going to do half my normal risk for now, and if we see a break of the support I look to add on later. Stay tuned and good luck!
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