After couple of good days late last week, Pound opened this one on a down note. Fairly strong one at that. Trouble started to brew right from the start, when many of GBP pairs opened down, with gaps. Those gaps were very small, not really tradable by themselves, as far as I’m concerned, but their direction often indicates prevailing trends for next day or so. Even if gaps are filled, that’s where trends turn in original direction of the gap. At any rate, opening didn’t look all that great for GBP. Or my trades.
Not everybody sees current fall in GBP as strictly speaking bad thing, for either Pound or UK. Some economists claim it is welcome, because it should help exports, and all trade, especially with Eurozone. It could even speed up recovery outpacing that of EU for considerable time. Guess it makes sense in a larger picture. Problem with larger picture is, that no matter how rosy it looks, it can’t really be defined well enough to be of help to active traders. For example, I generally agree that Pound is oversold now, but will not hold on to losing trades because of promising picture on the horizon. Or beyond.
First to go was GBP-AUD. Clearly the weakest of the three remaining trades, it was closed just few hours after the open, for a loss of 63 pips. Not much in relation to the gains I sought.
Trade in GBP-CAD was a little simpler. Price made another run on Friday’s high, building a minor low. When that level broke and, few hours later, 100 SMA also failed to hold, it was time to dump it. Outcome was -81 pips, but could have been much worse. Without this new low, next support level is about 120 pips lower, one that is being tested now. Might be a good idea to buy it it here, risks are very small.
Last one of Pound trades was EUR-GBP. I stayed in this one for quite sometime, with Euro having own problems. Eventually, I also ditched it, for about 40 pips loss.
My total sequence of long GBP trades produced three winners and three losers, with few smaller trades below. Winning trades were much better than losing ones, so altogether, nothing to complain about.
This week I still trade in limited capacity, as my other project demands a lot of attention. Time permitting, I’ll be trying to buy Pound crosses (yes, again). BTW, Yen pairs have built possible rounded tops and are bouncing right now. These levels, if broken, might be good entries if somebody wants to short them. Something to keep in mind.
Mike K.
It looks like I’m too late on the EUR/JPY. You called it, though.
Good blog.
Please hold out in the future.
Prudy, targets were small, dictated by the formation, but they were met, so things turned out good.
So, how did yen trades work out for you? I noticed the possible reversal on hourly charts (that’s what you were using, righ?) but just couldn’t bring myself to pull the trigger. Objectives must have been fairly small, in the 40-60 pips range. I just did projections on charts, and seems like they were reached. Sour after taste, but ther will be other trades.
Well, no surprise you didn’t have large target for eur/gbp trade. I expected major reversal, but it all fizzled out. I’d like to sell it again, but… Just like Michelle, having hard time to click the button.
Michelle, they worked fine, pretty much the way you outlined. I’ll post couple of snapshots tomorrow.
Andy, I would wait for reversal pattern before getting in, even if .91 level looks tempting. At least fake breakout or something like that.
[...] of days ago, when I was writing last post, Japanese Yen pairs formed a decent rounded top on hourly chart. Rounded tops tend to be reliable reversal patterns. The term “reversal” is a little [...]
[...] After few failed trades in Pound, I have been following these pairs with ever lower buy orders and GBP-AUD finally paid off. First trade was on the move above insignificant high. My target was much higher, but when price stalled at 100 SMA, and it looked like that was it, trade was closed for +79 pips. Next trade came on a little better defined breakout and produced 100 pips. GBP-NZD was also game, but only one trade there. Decent close to otherwise bleak week. Have a great weekend! [...]