Uh oh, I’m not feeling too good about this GBP/AUD long position so I might have to consider exiting early. Think it’s time to cut losses on this one or hold on?
Long GBP/AUD Trade
In my previous post, I mentioned waiting for some bullish momentum before hopping in a long position on a bounce off the channel support.
I thought that the pair was ready to resume the climb upon seeing mostly upbeat U.K. economic data and moving past the 1.7500 handle so I bought at market at 1.7505.
However, price is still treading sideways just below that 1.7500 mark again and it looks like bears won’t give up so easily.
Even though Aussie fundamentals look weaker, the focus on Brexit-related headlines since the start of the week appears to be weighing on the pound so far.Over the weekend, there were reports that the U.K. will walk out of Brexit talks if the EU slaps them with a huge bill, and this led to a notable gap down for pound pairs.
Keep in mind that negotiations are set to start soon and that the U.K. still has to content with snap elections on June 8, with opinion polls suggesting a tight race.
I’m thinking that fundamentals could take the back seat to politics and risk sentiment once more, which could mean more pound weakness in the days ahead.
I’ll wait for the markets to confirm or negate this hunch, and I’ll stand ready to jump ship on a break of the near-term support at 1.7350.
This would be above my original stop at 1.7275, allowing me to reduce my potential losses.
As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.