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Cancel Entry Orders: 2009-02-11 16:21

There wasn’t much of a rectracement after the break as ‘Cable’ only made a high around 1.4565 before continuing the move during the Asia trading session. After a brief spike due to the positive surprise in jobless claims, the British Pound fell after negative comments from Bank of England Governor Mervyn King on the U.K.’s economic situation.

I have decided to cancel my entry orders at 1.4650 and wait for a possible retracement to form before jumping back in short on GBP/USD. Stay tuned!

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Trade Idea: 2009-02-10 15:05

PoD Chart

Good afternoon! Big moves in the markets today as traders go into “risk aversion” mode. US Treasury Secretary Geithner announced details of the plan to hopefully stimulate lending by banks, but market players weren’t too impressed and showed their lack in confidence by returning to safe haven plays.

This brings about a short trade opportunity in “Cable” as the pair breaks below a rising trendline on the 4 hour chart. I think this will be a catalyst for a return move to the downside, especially if confidence continues to fall across the globe. Risk aversion may be back on the British Pound in the short term as a survey showed home sales continuing to drop in the U.K.

Back to the chart, the trendline break is an easy technical setup, but the question is, “will there be a continuation in the Asia and European markets, or will there be a retracement?” I think we may see a bit more continuation in the Asia markets, but a retracement during the European markets as they were still open during the announcement. Also, stochastics are showing a bit of an oversold environment on the 4 hour and 1 hour charts. Time for some profit taking? If we do see a retracement, I look to jump short on today’s developments. Here’s what I’m going to do:

Short GBP/USD at 1.4650, stop at 1.4830, pt1 at 1.4470, pt2 at 1.3550

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

We do have significant news coming from the U.K. in the form of the Bank of England Inflation report and Claimant Count Change. If I get in short before these reports, these events should help as unemployment claims are forecasted to rise and inflation continues to fall. We’ll have to wait and see…stay tuned!

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