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Trade Closed: 2009-05-15 07:23

Good morning! I was able to catch some pips yesterday for a small gain as Cable rallied higher to hit my entry orders at 1.5180. Luckily, the pair dropped far enough to hit my first profit target, where I was able to close half of my position to lock in profits and the stop on my remaining position to break even. Unluckily, GBPUSD gained some legs during the morning US trading session on a rise in risk tolerance and hit my adjusted stop loss and closed my trade.

1st Half: +100 pips
2nd Half: +00 pips
Total: +0.50% gain

So, a nice little gain for what has been a pretty range bound week in the markets. Lots of opportunity to play support and resistance, and a lot of areas of interest to watch. I hope everyone caught some pips. That’s it for me for the week. Have a great weekend everyone and see ya next week!

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Trade Idea:2009-05-13 10:25

PoD Chart

Good morning! I’ve got my sights on a simple technical setup on “Cable.” Today’s economic events have brought in sellers to GBP/USD…will the push lower continue?

On the four hour chart, there are a couple of technical signals that has got me bearish on the pair. First, there is a trendline break lower. Second, there has been regular bearish divergence as the price has kept making higher “highs” while stochastics were making lower “highs”.

Fundamentally, the Bank of England stated in today’s inflation report that the economy will be in the process of a “slow” recovery and that inflation is expected to stay below target for the next 3 years. This has sparked further quantitative easing speculation for the BOE. Coupled with today’s US retail sales data, which reported a drop of 0.4% in April, and March was revised downward to -1.3%, we saw sellers push GBP/USD down from 1.53 to 1.51.

I think that this brought the markets back to the reality that things are pretty bad and will continue to get worse. The sentiment that the decline isn’t as fast as during the deleveraging phase may not bring any more risk takers into the market. I think we will continue to see revisions in previous numbers, showing the true state of the economy and possibly a return to risk aversion.

So, I am bearish on GBP/USD in the short term and look to short on a pullback from today’s drop. Here’s what I will do:

Short GBP/USD at 1.5180, stop at 1.5280, pt1 at 1.5080, pt2 at 1.4980

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

Lot’s of data this week, so it be a bumpy ride! Stay safe and stay tuned!

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