Trade Closed: 2009-08-20 15:27
Good afternoon! There was a bit of pull back from pound weakness during the Asia trading session today and GBPJPY rallied back above my adjusted stop. My trade was closed at 156.20.
1st Half: +130 pips
2nd Half: +130 pips
Total: +1.0% gain
UK retail sales came out better than expected, but it was the larger than expected budget deficit that did the pound in. Soon after the release, the British Pound sold off against the Japanese Yen and US Dollar and found a bottom at the beginning of the US trading session.
I see any pullbacks higher as opportunities to sell GBPJPY as this deficit should be on the minds of traders for the short term. If we continue to see weak fundamentals and a fall in commodities prices, this trade will make sense if that scenario translates into risk aversion. We will just have to see what the market gives us. Stay tuned and thanks for checking out my blog!
Trade Update: 2009-08-19 11:30
Looks like I got a bit lucky on this trade as GBPJPY did rally up to 157.50 and quickly turned lower and nearly hitting my maximum profit target. Time for some adjustments.
Half of my trade was closed at my first profit target (156.20) and I adjusted my stop on my remaining position to breakeven to create a risk free trade. I have decided to adjust my stop one more time to lock in further profits.
Adjusting stop on remaining position to 156.20.
This was a very strong move overnight during the Asia and European trading sessions, so a pull back is due. Let’s see if the market takes us further down or if we go back into range bound mode. Stay tuned!
Trade Idea: 2009-08-18 15:10
Good afternoon! There’s been a lot of “fast and furious” action in the currency markets lately, and none can be better than in GBPJPY! The pair has been in a steady downtrend since making a double top around 163.00. Will that trend continue?
It’s a pretty simple technical trade as the pair has been making lower “highs” and lower “lows” on the four hour chart. The pair has retraced this morning on better than expected UK retail price and consumer price index data. The pair looks like it will test the 50% to 61% Fibonacci retracement area and the falling trendline. Will sellers take back control? I’m willing to bet they will….
Fundamentally, we saw a surprise strength in UK data this morning, but the catalyst for the next move in the pound will be the Bank of England meeting minutes tomorrow and overall risk sentiment. What does the BOE have in store for traders tomorrow? I’m not sure, but I do expect the event will bring volatility to the British Pound and general risk sentiment. Right now, risk sentiment is up on the day, but we all know that can change direction on a dime. Be flexible and focused!
For now, I will take a short in the area around the falling trendline and in between the 50% and 61% Fibonacci retracement levels. My stop will be above the falling trendline and I will target the previous swing low, and take profits along the way. Here’s what I am going to do:
Short GBPJPY at 157.50, stop at 158.80, pt1 at 156.20, pt21 at 153.50
Remember to never risk more than 1% of any trading account on any single trade. Adjust position sizes accordingly.
So, now just gotta sit back and see where the markets take me. Stay tuned and good luck in your own trading endeavors! Lastly, don’t forget to check out my main man Forexgump’s new economic article entitled, “Demystifying UK’s Economy!”
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