Reserve Bank f Australia had policy meeting, with interest rates on the agenda. RBA raised its benchmark official cash rate from 3.75% to 4.00%, or 0.25%. Move was widely expected and came as no surprise, unlike a month ago when officials took no action and Australian Dollar fell sharply. Analysts are calling for more rate hikes in the future, citing strong job market down under positive growth prospects. We will see how all this adds up when Australian GDP numbers are released on Wednesday.
The big story in FX trading over last few days has been British Pound, or, more specifically, its collapse. It just keeps falling. All kinds of theories fly around as to why, but most likely explanation is that sellers outnumber buyers. This maybe coming to an end, though. While no reversals have formed, yet, GBP pairs are starting to look ready for a correction, which could easily be in hundreds of pips, depending on the cross.
Sunday nigh/Monday morning my time looked promising for that. Pound opened with gaps, followed by rapid sell off, culminating in what looked like parabolic run. Depending on the pair used either top or bottom seemed possible. Very similar to what I call Sunday evening set up, so it was a call for action. With commodity currencies still strong, GBP-CHF and EUR-GBP were better prospects.
This chart of GBP-CHF shows accelerated sell off, with a sharp rebound. Market was entered on the long side as soon as the hammer was completed, at 1.6081. I thought that price would snap back all the way to the gap. While price made decent move, it failed to go that far. At the first sign of trend slowing down, position was closed, for a decent 120+pips. From my experience, if the gap doesn’t close by about 10-11 EST Monday, it could easily take another week or two to do that. I left it alone until just about an hour ago and decided on another long trade, with entry at 1.6025. This one is rather ambitious, with 300 pips objective and will probably take a while.
Similar trade was taken in EUR-GBP, making 71 pips. Entry was at the same time, and I bailed on the first sign of reversal. No new position here for the moment, but will consider it if the price drops to 0.9000. I’m very much tempted to simply buy all pound pairs, but can’t do that. GBP-CHF is enough for now, with EUR-GBP and GBP-NZD next on the list. Other ones have to start showing signs of reversal first. have to wait a little longer.
[...] movement late on Sunday and early Monday indicates possible bottom, at least for the time being. In the last post trade in GBP-CHF was talked about. It is still under, moving slowly in the desired direction. Hopefully it gets there. Next on the [...]
[...] wait longer. Thankfully, we have other currencies available, and s0me of them move a lot. Like the British Pound, which have been selling off badly lately, pretty much across the board. However last couple of days, and Friday in particular, [...]
[...] Depending on the pair used either top or bottom seemed possible. Very similar to what I call Sunday evening set up, so it was a call for action. With commodity currencies still strong, GBP-CHF and EUR-GBP were better prospects. … View full post on GBP/CHF – Google Blog Search [...]