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Trade Closed: 2010-03-23 19:45 EST

PoD Chart

Good evening! UK inflation data came out only slightly below expectations, but it was the CBI Distributive Trades that came in as a big disappointment (13 vs the previous month reading of 23) that pushed Cable lower to my stop out level and beyond.

Remaining position stopped out at breakeven (1.5050).

1st Half: +135 pips
2nd Half: +00 pips
Total: +0.675% gain

So, even though we didn’t get a move to previous resistance, it was still a nice one day gain, and I think with the weaker data released today, we will see a return to the downtrend for Cable.

For today, I’ll be watching EURUSD for a short term volatility as the European session is packed with eurozone data.

Thanks again for checking out my blog and the interesting comments below, good luck and good trading everyone!

Trade Adjustment: 2010-03-22 21:00 EST

Good evening! Cable managed to get down to my entry point at 1.4950 and found enough buyers to push the pair higher throughout Monday’s European and US trading sessions.

The pair has since moved as high as 1.5110, triggering my second order to go long another half position at 1.5050. I have also adjusted all stops to 1.4950. This puts me in a full position with an average price of 1.5000.

The BOE has forecasted that the current economic weakness may bring down inflation. This could be a huge risk event (and bad for long Cable trades), so I have decided to adjust my open position ahead of the UK report.

With the UK CPI soon to be released in the upcoming European trading session, I have decided to close down my initial half position at 1.5085 for a 135 pip gain.

This leaves my second half open and I will adjust my stop on my remaining position to 1.5050. This means I have no risk on the table and I will continue to hold my long position.

After the UK CPI data is released, and if my trade isn’t stopped out, I will add again if the trade goes my way.

Thanks for checking out my blog, and stay tuned!

Trade Idea: 2010-03-21 23:22 EST

PoD Chart

Good morning fellow Forex freaks and geeks! It looks like Cable is presenting me with my swing trade for the week as we have a couple of technical setups lining up. It’s going against the grain, so I’ll have to tread a bit more carefully than usual…

On the charts, we can see a few things going on here. First, the pair is testing a rising trendline acting as potential support. This area happens to line up with the psychologically significant level of 1.5000, so traders may be watching and waiting for the pair to stall or break. Also, stochastics are indicating that the recent swing lower from 1.5350 is a bit exhausted; is the market out of sellers? Last, and definitely not least, we can see hidden bullish divergence over three points as price lows trend higher while stochastic lows trend lower.

On the Forex calendar this week, we do have data from both the US and the UK with the potential to cause a ruckus. Most notable would be the UK CPI data on Tuesday, the US Durable Goods orders on Wednesday, and US GDP and PCE data on Friday. Besides these events, the rest of the calendar is packed, and there’s plenty of side stories, including the Greece debt situation, US vs. China trade wars, and the recent passing of the US health care bill to bring surprises and shifts to risk sentiment. As always, stay alert and flexible.

So, I plan on going long based on the technical setup, but because this goes against the downtrend on the higher time frames I plan on risking half of my usual 1%. I will wait until the market does reach the trendline before going long, and my stop will be a healthy 100 pips to give breathing room to this trade. Like my last trade, I will add onto this position every 100 pips and ultimately target the area around the previous swing high. With every addition, I will adjust my stop 100 pips, so I will never risk more than 0.50% on this trade. If it does hit my final profit target, I stand to make 5% or a 10:1 reward-to-risk ratio. Here’s what I am going to do:

Long GBPUSD at 1.4950, stop at 1.4850, final pt at 1.5350

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

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