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Trade Close: 2009-03-16 07:14

Boo!!! My trade was stopped out during the Asia trading session. It was a bit frustrating as I was in profit at the open of trading this week, but the Greenback is losing ground as the need for a “safe haven” falls. The falling trendline was broken and confidence is returning to the markets as Fed Chairman Bernanke states that “the recession is coming to an end this year.”

The Greenback is selling off and Cable hit my stop at 1.4150.

Total: -200 pips/ -1.0% loss

The long US Dollar trade seems a bit over done at the moment as everyone seems to be running to the US for safety. This may be a sentiment change, but I doubt it is as there are more projections for more bad economic data.

We do have the FOMC meeting this week, and after they announce their decisions, there tends to be a tendency for risk aversion. Let’s see how that goes and if there’s another opportunity for a high probability trade. Stay tuned!

Trade Update: 2009-03-12 21:34

Good evening! Cable rallied during the European/US trading session overlap and hitting highs for the day just below the 1.4000 handle. Price action is currently muted during the Asia trading session and holding below 1.4000.

Well, one more day to go before the end of the trading week and there are a couple of events to take heed of during the upcoming US trading session. We’ve got US Import Prices, Trade Balance, and Consumer sentiment data in the line up, and if we see weak data once again, we may see some risk aversion price action to close out the week.

Depending on how the markets play out tomorrow, I may reduce my risk going into the weekend by closing down part of my trade or all of it. Stay tuned!

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Trade Update: 2009-03-11 16:29

Good afternoon! Cable did retrace just a bit after my initial trade idea was posted, but dropped soon after. Looks like the current retracement on broad US Dollar weakness may give me another shot to jump in short at my predetermined entry levels.

I have decided to keep my open orders alive and see if they get triggered. The risk is that the current US Dollar weakness is based on the easing of the banking crisis, so we’ll have to see if that continues or if enough fear will return to traders and run to the Greenback once again.

Stay tuned and good luck!

Trade Idea: 2009-03-09 22:27

PoD Chart

What’s up! Cable broke below support during the European and US trading session overlap, and it looks like the markets have calmed down as we begin the Asian trading session. If the pair rallies, do we have a “support-turned-resistance” play setting up?

I think we do, and it would play nicely with the fundamentals as things look worse and worse across the globe everyday and bring on more risk aversion price action. This holds true in the UK as we see banks being taken over by the government and as well as quantitative easing policies taking place. Doesn’t look good for the Pound fundamentally, especially as the world flocks to the US Dollar during the economic crisis.

If we do see the pair rally back to the broken support, we may see resistance as traders may look for another opportunity to short the current environment. I have drawn a Fibonacci on the recent swing and the 50% retracement area lines up nicely with previous support. I will short there with my stop above the 61% Fibonacci retracement area. Here’s what I’m going to do:

Short GBP/USD at 1.3950, stop at 1.4150, pt1 at 1.3750, pt2 at 1.3550

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

Plenty of data in the US this week, including Retail Sales and Trade Balance to push Cable around. Stay tuned for updates and adjustments!

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