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Trade Closed: 2010-03-25 22:11

PoD Chart

It looks like I was too aggressive with this one, shorting way too early, and placing my stop too tight. Do’h!

In retrospect, a better decision would’ve been to sell the pair when it hits the falling trend line, which I missed by the way, at 138.00. It was a psychologically significant round number and stochastics would’ve showed overbought conditions… Or maybe, I should’ve closed my trade just before the UK released their retail sales report, which printed better than expected results. I could’ve locked in a few pips then. Then again, things are always clearer in hindsight.

Stopped out at 138.00 with a total loss of -105 pips / -1.00%

It’ll be interesting to see if this trend – line holds – we’re seeing a lot of yen weakness across the board. In fact, the USDJPY has just broken past a long term downtrend line. If that pair continues to rise, we may just see other yen pairs rise as well.

Trade Idea: 2010-03-22 22:49

PoD Chart

I spy with my one eye a nice little setup on the charts. Could this be a nice time to short the GBPJPY?

With stochastics not at overbought territory yet, I suspect the pair could still head higher. I’m looking short the pair right when it tests the intersection between broken ascending trend line support and the 50% Fibonacci retracement level. I also like how the 50% Fibonacci retracement level lines up nicely with 137.00, a nice, juicy, round number.

On the economic front, I took a look at Pip Diddy’s economic round up today and it looks like we’ve got some CPI data coming out from the UK today. Last month, there were concerns that inflation was getting out of control, having posted a 3.5% increase in consumer prices. Rising prices are expected to have eased slightly in February, showing just a 3.1% uptick.

Now, as my buddy Forex Gump said in his post yesterday, it seems that the BOE wants to weaken the pound for a couple of reasons. If inflation looks to remain subdued, we could see the BOE keep rates at lower levels, or even expand their quantitative easing measures, which in turn could lead to even more pound weakness.

I’m also keeping my eye out for the CBI Realized sales index and the BBA mortgage approvals figures. The sales index is projected to post a lower reading, while the annualized rate of mortgage approvals is expected to dip. Now, if these reports all come in worse than expected, it would show even more instability in the UK economy.

I have set two profit targets: the first one at the previous day high and the second one at this year’s low. I placed my stop just a couple of pips above the 61.8% Fibonacci retracemenet level to give my trade some room to breathe.

Short GBPJPY at 136.95, pt1 at 134.60, pt2 at 132.60, stop at 138.00

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