Pick of the Day: GBP/USD – Cancel Entry Orders

Cancel Entry Orders: 2009-02-11 16:21

There wasn’t much of a rectracement after the break as ‘Cable’ only made a high around 1.4565 before continuing the move during the Asia trading session. After a brief spike due to the positive surprise in jobless claims, the British Pound fell after negative comments from Bank of England Governor Mervyn King on the U.K.’s economic situation.

I have decided to cancel my entry orders at 1.4650 and wait for a possible retracement to form before jumping back in short on GBP/USD. Stay tuned!

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Trade Idea: 2009-02-10 15:05

PoD Chart

Good afternoon! Big moves in the markets today as traders go into “risk aversion” mode. US Treasury Secretary Geithner announced details of the plan to hopefully stimulate lending by banks, but market players weren’t too impressed and showed their lack in confidence by returning to safe haven plays.

This brings about a short trade opportunity in “Cable” as the pair breaks below a rising trendline on the 4 hour chart. I think this will be a catalyst for a return move to the downside, especially if confidence continues to fall across the globe. Risk aversion may be back on the British Pound in the short term as a survey showed home sales continuing to drop in the U.K.

Back to the chart, the trendline break is an easy technical setup, but the question is, “will there be a continuation in the Asia and European markets, or will there be a retracement?” I think we may see a bit more continuation in the Asia markets, but a retracement during the European markets as they were still open during the announcement. Also, stochastics are showing a bit of an oversold environment on the 4 hour and 1 hour charts. Time for some profit taking? If we do see a retracement, I look to jump short on today’s developments. Here’s what I’m going to do:

Short GBP/USD at 1.4650, stop at 1.4830, pt1 at 1.4470, pt2 at 1.3550

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

We do have significant news coming from the U.K. in the form of the Bank of England Inflation report and Claimant Count Change. If I get in short before these reports, these events should help as unemployment claims are forecasted to rise and inflation continues to fall. We’ll have to wait and see…stay tuned!

  • PipWolf

    I just placed my limit orders for this one. Looking forward to seeing how it pans out.

  • volodja

    Pipcrawler, when you made your decision, did you take into account that GBPUSD is still trending down on the daily chart and that it necently reached the 50-period EMA there, with strochastics in the overbought area, and then pulled back from it? I mean, the 4-hour chart trend breakout alone is probably not enought signal to trade the direction of the breakout…

  • bilal_shirazi

    Hit your first target already, why can’t we get RSS feeds for content updates to your blog?

  • julian

    hi pipcrawler..i am now set up with the order, lets hope for some ladyluck that it goes to plan… out of interest why are you waiting for it to retrace that far before getting in ? thanks

  • julian

    hi bilal.. i might be wrong but im sure it has not kicked in yet so therefore not hit first target

  • volodja

    Pipcrawler, concerning your entry point, is it calculated to be near the 38.2% Fib level on the hourly or 4-hour chart? Also, did you set your stop to be approx. half of the daily ATR of GBPUSD or you set it so that is was above the 61.8% Fib level on the hourly or 4-hour chart?

  • volodja

    Similar signal seems to be for the GBPJPY.

  • Pipcrawler

    Thanks for the comments everyone! volodja – I do not use moving averages for support and resistance, so I can’t comment on its reaction. For me, the trendline break is enough to go short along with the current environment. If I’m wrong, then that’s what money management is for. :) bilal shirazi – My trade hasn’t triggered yet as my orders are way above the current market. Julian – I just have a feeling that the 500 pip move Cable made in the last trading session is way to fast, and there’s profit taking to be had. This may push Cable up a bit, why not jump in at a better price and reduce my risk??? I hope this helps!

  • thegolfman3

    I dont belive this has kicked in yet either, But if you did pick up some pips thats Great. Wouldnt short now til it hits its target or you will be shorting from wrong target

  • bilal_shirazi

    Doh, makes perfect sense now

  • cadarkitek

    I’m going short as well after the daily close. Its just before a downtrend line on my daily chart and a possible evening star formation at the close of the present daily bar. Its also at a fib. retracement 78.6 from the last swing.

  • PipWolf

    bilal, there is an RSS feed for this blog. The url is link to feeds.feedburner.com. You can link to it by following the “Feed Yourself” link in the “Subscribe” section at the top right of the page. It works just fine for me using Google Reader.

  • PipWolf

    I just placed my limit orders for this one. Looking forward to seeing how it pans out.

  • volodja

    Pipcrawler, when you made your decision, did you take into account that GBPUSD is still trending down on the daily chart and that it necently reached the 50-period EMA there, with strochastics in the overbought area, and then pulled back from it? I mean, the 4-hour chart trend breakout alone is probably not enought signal to trade the direction of the breakout…

  • bilal_shirazi

    Hit your first target already, why can’t we get RSS feeds for content updates to your blog?

  • julian

    hi pipcrawler..i am now set up with the order, lets hope for some ladyluck that it goes to plan… out of interest why are you waiting for it to retrace that far before getting in ? thanks

  • julian

    hi bilal.. i might be wrong but im sure it has not kicked in yet so therefore not hit first target

  • volodja

    Pipcrawler, concerning your entry point, is it calculated to be near the 38.2% Fib level on the hourly or 4-hour chart? Also, did you set your stop to be approx. half of the daily ATR of GBPUSD or you set it so that is was above the 61.8% Fib level on the hourly or 4-hour chart?

  • volodja

    Similar signal seems to be for the GBPJPY.

  • Pipcrawler

    Thanks for the comments everyone! volodja – I do not use moving averages for support and resistance, so I can’t comment on its reaction. For me, the trendline break is enough to go short along with the current environment. If I’m wrong, then that’s what money management is for. :) bilal shirazi – My trade hasn’t triggered yet as my orders are way above the current market. Julian – I just have a feeling that the 500 pip move Cable made in the last trading session is way to fast, and there’s profit taking to be had. This may push Cable up a bit, why not jump in at a better price and reduce my risk??? I hope this helps!

  • thegolfman3

    I dont belive this has kicked in yet either, But if you did pick up some pips thats Great. Wouldnt short now til it hits its target or you will be shorting from wrong target

  • bilal_shirazi

    Doh, makes perfect sense now

  • cadarkitek

    I’m going short as well after the daily close. Its just before a downtrend line on my daily chart and a possible evening star formation at the close of the present daily bar. Its also at a fib. retracement 78.6 from the last swing.

  • PipWolf

    bilal, there is an RSS feed for this blog. The url is link to feeds.feedburner.com. You can link to it by following the “Feed Yourself” link in the “Subscribe” section at the top right of the page. It works just fine for me using Google Reader.

  • aokmanga

    It took the pt1 but not the price…

  • pipsawa

    Hi Pipcrawler, where did you find this survey of home sales (for GDP)? – thanks
    cedric

  • blue@sky

    Hi Pipcrawler, how you set the pt1 and pt2 for this trade?

  • aokmanga

    It took the pt1 but not the price…

  • pipsawa

    Hi Pipcrawler, where did you find this survey of home sales (for GDP)? – thanks
    cedric

  • bilal_shirazi

    Anyone have a sense of when the short entry will trigger?

  • xaser

    I dont think this trade will trigger, and if it will it will be for the wrong reasons and possibly be flawed. It already broke the 38 fib. Just my 2 cents. I saw the clean break initially and jumped in this trade earlier, I also thought that it will bounce back up at the 38 fib and had an order setup to increase my lot size if it would. Great setup Pipcrawler, always a pleasure to read your ideas!

  • julian

    sorry for being dumb.. what is an RSS feed ? if its an alert available every time ther is a new blog then that is exactly what i need !!

  • bilal_shirazi

    Yeah, that’s exactly what it is. You need a reader to get the alerts, either desktop software or web readers like google reader or my.yahoo

  • blue@sky

    Hi Pipcrawler, how you set the pt1 and pt2 for this trade?

  • bilal_shirazi

    Anyone have a sense of when the short entry will trigger?

  • xaser

    I dont think this trade will trigger, and if it will it will be for the wrong reasons and possibly be flawed. It already broke the 38 fib. Just my 2 cents. I saw the clean break initially and jumped in this trade earlier, I also thought that it will bounce back up at the 38 fib and had an order setup to increase my lot size if it would. Great setup Pipcrawler, always a pleasure to read your ideas!

  • julian

    sorry for being dumb.. what is an RSS feed ? if its an alert available every time ther is a new blog then that is exactly what i need !!

  • bilal_shirazi

    Yeah, that’s exactly what it is. You need a reader to get the alerts, either desktop software or web readers like google reader or my.yahoo