Bank of England released minutes from its last policy setting meeting. What are the “minutes”? It is a transcript of what happened during the meeting, going well beyond any official statement released afterwards. Market observers look into details of these meetings, trying to see if any policy changing vote was unanimous, or not, who said what things, was there any discord, etc. Some people are looking for “hints” of any future changes, weighing in forcefulness of what members said. Search for hidden meanings is on. This is being used to “predict” outcome of next meeting. Entire enterprise reminds me of efforts to crack the “Da Vinci code” or decoding a fake lost Spanish treasure map. As far as I’m concerned it is more of a wishful thinking and dart throwing than bona fide analysis.
British Pound registered strong gains, supposedly in response to the minutes. Policy makers voted unanimously to leave their quantitative easing policy in place. This means no extension or increase in purchasing assets like bonds and other debt instruments, one of the tools used by central bank to pump money into economy. Another one being interest rates cuts, but these are largely pushed to limits. At any rate, all this means that Bank of England will not “print” additional untold billions, farther diluting value of existing Pounds. For now, at least. Markets appreciated it and GBP had a good day.
Reasoning behind the move aside, I liked it. My GBP-JPY trade, last mentioned in the Getting serious with China post made another solid move. Stop loss can be moved to above entry price, thus making sure this trade will be profitable.
Price moved above previous minor high of 149.40, creating new low which can be used for a stop/loss. It happens to be 147.00. Moving my stop there ensures profit. As a reminder, this trade has no objective set, it will remain live until price action determines it by moving under most recent minor low using 4H chart. I can only hope it is going to be much higher than 147.00 currently in place. Market will decide.
Few days ago I showed some long term EUR-GBP charts, looking for this cross to head lower. As it was stressed there, weekly charts were for guidance, while any trading would be done using smaller time frames, like daily. I was looking for price to dip under 0.9070, previous low. This would be first step in reversing a trend. This happened yesterday and continued today. Sell order could have been placed there, but I consider it to not have right risk/reward characteristics and would like to see a price rebound first. How big? The bigger the better, really, but minimum to about 0.9170 on any bearish reversal candle.
This is how it looks like on 4H chart. Sell area is largely the same somewhere between 0.9155 and 0.9250, although I’d be leaning towards lower range here. While price appears to be moving up, there is no guarantee any of these sell scenarios will materialize. An alternative is to sell EUR-GBP if it makes a new low at 0.8980. This happens to be next important support, which, once broken could open the road for a 250 pips move. Given fairly large time frames used, actual entries will likely be adjusted as price develops, but general plan is in place.
Mike K.
You wetted my appetite for eur/gbp, just like earlier in the year. I’ll follow it with interest. Waiting is the worst.
This is a nice run you caught in the beast. You know, a lot of the gains will be lost if you wait for the market to shake you out. 151 is probably extent of the run.
Yes Andy, waiting is simply awful.
I know that, FXG, but this particular strategy calls for holding on as long as possible. Market decides exit.
[...] Central Bank’s minutes. | fxmadness.com fxmadness.com/2009/10/21/trades/central-banks-minutes – view page – cached Bank of England released minutes from its last policy setting meeting. What are the minutes? It is a transcript of what happened during the meeting, going — From the page [...]
[...] which is a foundation for more decisive break when it eventually happens. Not much to add to EUR-GBP analysis from last post, they are still valid. Market is bouncing a little, but is not within the sell zone [...]
Hello from Russia!
Can I quote a post in your blog with the link to you?
Yes, no problem.
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