Bank of England joins an ever lengthening list of central banks which support weal local currency. Unlike, say, Reserve Bank of New Zealand, or Swiss National Bank, BoE finds itself in much more comfortable position in regards to its desires- Pound is already in shambles and falling even more. BoE governor, Mr. King, expressed content with latest developments, causing farther drop in GBP. Talking the Pound down appears to be one of the favorite activities for them, and one of the very few that actually work, after a fashion. Just how much longer will that last? Who knows? Strange world we live in- everybody wants to have weak currency.
This includes US and the Dollar. Much like expected, FOMC announcement yesterday produced no surprises. Interest rates were left alone at a fraction above zero, and projected to remain depressed, most likely helping USD to gradually keep falling in relation to other currencies. Reaction to the news was relatively subdued, especially when looked at from perspective of hourly charts or higher magnitude. All you can see is a minor price spike- nothing.
In sharp contrast, Pound made strong moves today, reacting to King’s comments- it fell a little slower than the proverbial rock. Strong moves. This put a wrinkle on my British Pound- Canadian Dollar trade. Not a wrinkle, more like a wrecking ball. Given the speed and magnitude of the move, relative to most recent price action, I got out of the position once the sell off started.
Normally, I’d be looking to maybe buy a little more one a pull back to 100SMA. This time, however, that bearish candle falling under it, is so much bigger than most recent price action, typical of start of something bigger. I took 104 pips loss. price continued down, all the way to next support at around 1.7340. In my view this will hold, for now at least and there is going to be a reaction here. With this in mind, I went long at 1.7354. Once again, I’m looking for a bounce, reaction, not a bottom. Risk is about 40 pips, while target 80-100 pips. With any luck, it still could happen today.
Punding of the Pound also made it necessary to adjust my price action trade buy order for GBP-JPY. New intended entry is at
Few months ago a took a trade in precious metals, which was featured here in Gold-silver trade post. I was playing price ratio between the two. I’m happy to say, that, after long wait, this trade was closed last night with surprisingly good results. It will be given its own post, since few snapshots are needed, either tomorrow or on Saturday. GBP-CAD is moving nicely up right now…
Mike K.
Very good timing going long gbpcad. And right after the loss. By now you must have recovered the losses. Are going to make a longer term trade or only the 80-100 pips you said earlier? Thank you.
Hello.
I have been following this website for about a month and find it fascinating. Granted, I don’t understand most of it, but the concept of trading currencies is very appealing, if strange to me. My own background is in stock trading, not long and futile. You mentioned something about gold and silver. Does it mean you also trade futures or only forex? Just wanted to express my thanks for this great work you are doing. Looking forward to reading many more posts.
Jessica.
Gunnar, no. I went for the short target, extended it it by few pips to 100SMA and this is it, I was out 2 hours after entry. Details in next post.
Hi Jess. Thank you for kind comments. I focus on Forex, trading commodities from time to time. Those trades make it to the blog extremely rarely. As stated above, gold-silver trade will be discussed soon in some details. Thanks for reading!
Do you know what is happening to Yen? Keeps getting stronger and stronger. You had very little coverage of it- by design?
What an entry into that Pound trade. Yes! One day you should disclose just how you did it. Nice!
Bob, I have no idea why yen is getting stronger. Probably “safety” again, or some other crap like that.
Bravo, son el pensamiento simplemente magn?fico
Hi. This chart of GBPJPY brings me some good memories. I actually made 3 successful trades in a row at that time using a trend line which i plotted on the chart, even if i don’t usually look very much at trendlines. So.. probably it was just luck. Anyway, i remember feeling like i took ecstasy
That is the adrenaline! That’s why we love trading:)