Trade Closed: 2013-07-26 3:25
What a tough day!
Not long after I entered a long trade at market yesterday, the U.K. finally released its recent quarterly growth figures. Apparently, the UK economy had grown by 0.6% in the second quarter, double its growth in Q1 2013.
You would think that the positive figures would entice the pound bulls into buying it against the bearish comdolls. That’s what I thought, too.
As it turned out, the market players’ expectations for the GDP report were so high that meeting the median estimates just weren’t enough. Heck, GBP/AUD hit my stop loss faster than I could say “George Alexander Louis”!
I’ll definitely try news trading again someday, but maybe I can wait for the actual release and just jump in or I could also risk smaller position sizes when price could go in either direction. Do you have any helpful strategies in news trading? Any help would be much appreciated!
Trade Idea: 2013-07-25 4:15
Since dollar behavior has been tricky to predict these days, I’m going for a comdoll cross instead. And with the UK GDP release coming up, here’s my plan for GBP/AUD:
The pair has been consolidating below the 1.6775 level for the past few hours, forming a bullish pennant as pound traders are sitting on the edge of their seats prior to the GDP release. Analysts are expecting to see 0.6% growth, but Forex Gump thinks that there’s a good chance for an upside surprise.
As for the Australian dollar, it is still undergoing heavy selling pressure after HSBC reported a deeper contraction in China’s manufacturing industry. The flash PMI was expected to improve from 48.2 to 48.6 but it fell to 47.7 instead.
If the UK GDP does come in stronger than expected, GBP/AUD could make a strong upside breakout and climb towards the next resistance around 1.6880. I ended up buying at market (1.6790) prior to the actual release and I’m planning to move my stop to entry once price reaches the 1.6880 region.
Do you think this is a good idea? If you’re planning to jump in with me, make sure you take a look at our risk disclosure first!
Other Popular Articles: