Close Trade: 2009-04-22 14:49

What's up! It's another great afternoon, especially as GBP/USD falls today on news that the UK Treasury plans on selling a record number of gilts in an attempt to lift the economy out of recession. GBP/USD hit 1.45 along the way and closed out have of my position in the process to lock in some profits. I have decided to close out my whole trade and closed my remaining position at 1.4510. This was a fast move lower and I think I can catch a better price on a retracement - possibly back up to 1.4600.

1st Half: +200 pips
2nd Half: +190 pips
Total: 0.975% gain

So, nice little gain for one day's trade and I don't feel bad for not trying to go for further gains. It's a choppy market and you gotta take profit a bit quicker now a days.

Again, I will watch 1.4600 for any resistance and possibly jumping back in. Thanks for checking out my blog and stay tuned!

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Trade Idea: 2009-04-21 13:33

Good afternoon Forex fanatics! There is a simply trendline break play forming on GBP/USD that I'd like to check out. Will the pair drop back further?

On the four hour chart, I have a trendline connecting three or four previous lows that has been broken. I saw this move yesterday and felt this move may be a bit over done and due for a correction. Luckily, that correction happened to day and Cable is back to the broken trendline where it might find resistance. I also used the Fibonacci tool to find possible reversal points and it looks like the 38% Fib retracement level is right at 1.4700. Here's what I did:

Shorted GBP/USD at 1.4700, stop at 1.4900, pt1 at 1.4500, pt2 at 1.4140

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

My stop is above the 61% Fibonacci area and 200 pips from my entry - around the daily ATR of about 230 pips. For my ultimate profit target, I picked previous resistance around 1.4140 marked on the chart.

Fundamentally, it appears were still in a recession which appears to stick around for quite a bit longer as unemployment continues to rise around the globe and thus growth will continue to slow along with that trend. Risk aversion may still be the main price influence in currencies and the earnings season in equities may be the determinant on whether we see risk aversion or risk tolerance in the short term. I expect more risk aversion, but with LOTS of choppiness along the way.

Quite a few data points to be released this week, most notable is the Bank of England meeting minutes, UK retail sales. In the US, it will be initial claims on Thursday and durable goods orders on Fridays. Again, expect short term volatility.

That's it and i'm out like a trout. Stay tuned and good luck!