There was an “ok” amount of movement in the markets today, none of which really gave any time for me to find a plausible entry, but at least there was something. I came very close to entering 2 trades.
The first one was the GBP/USD. Yesterday I mentioned that I was looking to short the pair after seeing a nice retracement from a prolonged downtrend in the 4 hour chart. The pair also skimmed the 1900 level so a short trade was my plan of attack. I was waiting for signs that momentum would pick up in the dollars favor and at 8am I had my opportunity of attacking. But I was faced with a dilemma. Yes the technicals were giving me signs of an entry but with the plethora of US economic reports still yet to come out, I could be getting into a sticky situation. I decided that even though technical signs led to a short trade, the fundamental mysteries would still lead to a chaotic day. And that is exactly what happened. Although at the end of the next 4 hour candle, price did end up closing much lower than what would’ve been my entry, the high of that candle proved that my “chaotic day” news assumption was correct. Had I entered, I would’ve lost because the next candle spiked up high enough to where I would’ve placed my stop loss. I would’ve gotten stopped out and then to add to the pain, the price would’ve dropped and I would be kicking myself for getting spiked out. I was very happy with my decision to stay out of this one today. However, I am still not giving up on this pair. At the beginning of next week I will look for another opportunity to short this pair as all my technicals point to a drop in the Cable.
The other pair I almost entered was the USD/JPY. I’ve been talking about its recent 20 day high and how there would be a retracement. The retracement came as I expected, producing a 2 day low and now my only action was to wait and see if the pair could break its 20 day high which was at 118.14. Today, the pair got as high as 118.11 but unfortunately it wasn’t enough to put me in a trade. I am still set to go long on this pair if the price breaks 118.14. We will have to see what happens next week. For now I put my trading gun back into my holster.