Pick of the Day: GBP/USD – Close Open Orders

Close Open Orders: 2008-10-27 18:31

Cable fell as hoped, but missed my short entry orders at 1.59 before doing so. Doh!
Since I missed the move on this blog, I have decided to close my entry orders to look for another opportunity.

Close open orders to short 1.59. No trade.

I had a question in the comments on scaling into positions and I realized we didn’t even have a lesson on that trading technique! So, I have decide to write a quick lesson on “Scaling in” in my next post and probably a full out lesson on the different scaling techniques for the School of Pipsology. Keep an eye out for those and stay tuned!

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Trade Idea: 2008-10-26 19:55

PoD Chart

What’s Up! Looks like Cable might be the play of the week as it looks like the pair is giving us another opportunity to jump in the downtrend.

Another simple technical play as the pair rallies after making a low last week just below 1.53 to the Fibonacci retracement levels drawn on the chart. In a downtrend, these levels tend to be used as potential entry points to re-enter short. Stochastics are in near overbought levels indicating we may see a swing lower.

Fundamentals are still bad for both the US and the UK, but it recent price action indicates the focus has now shifted from US weakness to UK weakness. This may continue especially as we continue to see institutions deleveraging out of riskier plays, like the carry trade, and into safe havens like the US Dollar. This week we have plenty of economic data to watch from both sides of the pond, most of which is forecasted to be weaker. I think the event of the week is the FOMC interest rate decision. Will the Fed cut rates again? Some think they will, possibly as much as 50 basis points. If we do see a cut, this may give Cable a short term boost higher. If not, we may see more Cable selling this week.

So, I’m going short based on the technical setup, trend lower, and the sentiment is the focus has shifted to UK weakness. My potential risk is the FOMC rate cuts this week and that sentiment may shift as the pair may be oversold in the short term. I’d like to scale into my overall position at the different Fibonacci levels, but to keep it simple for this blog, here’s what I’m going to do:

Short GBP/USD at 1.5900, stop at 1.6100, pt1 at 1.5700, pt2 at 1.5000
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

If my trade is triggered and my first profit target is hit, I will close out have of my position and trail my stop by 200 pips.

Stay tuned!

  • enochbenjamin

    you must feel strongly about this one as you have increased the amount you are willing to lose in order to be proven wrong.

  • Anaiya

    I have been watching this trade and was hoping that you would pick this one. Just my luck to start off the week.

    Good analysis pipcrawler.

  • tjhimself

    120+ pips closed at 1.57 nice call GOD OF ALL PIPS

  • Pipcrawler

    Thanks for the comments everyone. Enochbenjamin, Im not sure what you mean… Even if I have a wider pip stop, I never risk more than 1% on a trade, and usually I dont risk more than .25% – .50% of my account. You just have to reduce your position size to do so…

  • Pipcrawler

    Plus volatility has been astronomical, so Ive had no choice but to widen my stops and reduce my position size… does this make sense?

  • afish999

    pipcrawler did you just sell at market once it was in the sell area? or was your orders never triggered?

  • Pipcrawler

    afish999 – I like to scale into this type of trade, but for my blog i keep it simple and the market has not reached the 1.59 level…

  • enochbenjamin

    you must feel strongly about this one as you have increased the amount you are willing to lose in order to be proven wrong.

  • endeemm

    Thanks for the 100 pips, closed at 1.5600!

  • Anaiya

    I have been watching this trade and was hoping that you would pick this one. Just my luck to start off the week.

    Good analysis pipcrawler.

  • tjhimself

    120+ pips closed at 1.57 nice call GOD OF ALL PIPS

  • Pipcrawler

    Thanks for the comments everyone. Enochbenjamin, Im not sure what you mean… Even if I have a wider pip stop, I never risk more than 1% on a trade, and usually I dont risk more than .25% – .50% of my account. You just have to reduce your position size to do so…

  • Pipcrawler

    Plus volatility has been astronomical, so Ive had no choice but to widen my stops and reduce my position size… does this make sense?

  • afish999

    pipcrawler did you just sell at market once it was in the sell area? or was your orders never triggered?

  • Pipcrawler

    afish999 – I like to scale into this type of trade, but for my blog i keep it simple and the market has not reached the 1.59 level…

  • pipskelter

    Pure Genius

  • sardpl

    In your post you say “I’d like to scale into my overall position at the different Fibonacci levels”. The same concept have been expressed by Cyclopip in his blog of the 23 Oct.
    Can you explain what this technique is?
    Thanks.

  • endeemm

    Thanks for the 100 pips, closed at 1.5600!

  • Pipcrawler

    thanks for the comments everyone! sardpl – ill explain “scaling into positions” a bit more in my update. stay tuned

  • pipskelter

    Pure Genius

  • sardpl

    In your post you say “I’d like to scale into my overall position at the different Fibonacci levels”. The same concept have been expressed by Cyclopip in his blog of the 23 Oct.
    Can you explain what this technique is?
    Thanks.

  • PipWolf

    I was right there with you on this one – I actually placed my trade at the end of last week at 1.59 (based on the same Fibonacci data you showed). PT1 was 1.58, PT2 was 1.50, SL was 1.60 on both, trailing 100 pips for PT2. PT1 was easily hit over the weekend for +100 pips, and my trailing stop got hit this morning for +476 pips. Awesome – I never thought I’d be so happy about the currency of my homeland having the crap kicked out of it.

    Question though: On the 4 hour chart, a double bottom seems to be forming. Do you think we will see a reversal?

  • Pipcrawler

    thanks for the comments everyone! sardpl – ill explain “scaling into positions” a bit more in my update. stay tuned

  • Pipcrawler

    Congrats Pipwolf. I’m very cautious with long technical setups at this time as the market is probably more sentiment driven rather than fundamental or technical. I think is a good setup during normal conditions, and if we see a rate cut from the FOMC, it may work out well, but in the current environment, I would be cautious doing any counter trend trades to the upside. Remember, institutions are deleveraging and focusing on UK weakness rather than US weakness. It’s up to you and I wish you well.

  • PipWolf

    I was right there with you on this one – I actually placed my trade at the end of last week at 1.59 (based on the same Fibonacci data you showed). PT1 was 1.58, PT2 was 1.50, SL was 1.60 on both, trailing 100 pips for PT2. PT1 was easily hit over the weekend for +100 pips, and my trailing stop got hit this morning for +476 pips. Awesome – I never thought I’d be so happy about the currency of my homeland having the crap kicked out of it.

    Question though: On the 4 hour chart, a double bottom seems to be forming. Do you think we will see a reversal?

  • Anaiya

    Pipcrawler I locked in 400 pips off this trade. Well done. I noted a similar pattern in the EUR/JPY and locked in 100 pips there.

    Thanks again,

  • Pipcrawler

    Congrats Pipwolf. I’m very cautious with long technical setups at this time as the market is probably more sentiment driven rather than fundamental or technical. I think is a good setup during normal conditions, and if we see a rate cut from the FOMC, it may work out well, but in the current environment, I would be cautious doing any counter trend trades to the upside. Remember, institutions are deleveraging and focusing on UK weakness rather than US weakness. It’s up to you and I wish you well.

  • PipWolf

    Thanks Pipcrawler! Very true that this unwinding is due to sentiment rather than anything else. I wasn’t planning on entering long; rather I thought we might see a bear market rally that would give us another opportunity to get in short at a good price.

  • Anaiya

    Pipcrawler I locked in 400 pips off this trade. Well done. I noted a similar pattern in the EUR/JPY and locked in 100 pips there.

    Thanks again,

  • PipWolf

    Thanks Pipcrawler! Very true that this unwinding is due to sentiment rather than anything else. I wasn’t planning on entering long; rather I thought we might see a bear market rally that would give us another opportunity to get in short at a good price.

  • dailyearner

    very good information.
    thx for sharing with us!
    come one, hope you can bring us more good idears.

  • dailyearner

    very good information.
    thx for sharing with us!
    come one, hope you can bring us more good idears.