Hey everyone, just wanted to share my trading plan for GBP/USD, price is approaching the 1.63 mark, which is a key resistance level that has bounced price back down on 3 recent occasions in 2012 including April, September and December.
I will be selling the pair at this point, as you can see written on one of my pictures of the hourly chart, I am setting a 1/2 profit take at the first major support which I believe is at 1.583 and then taking the left over position profit at 1.53.
I am planning to set a 50 pip stop above the recent support/highs of 1.63, which will give me about a 30:1 reward:risk ratio.
One of the reasons I am looking forward to this trade, is that the 1.63 has been a very strong resistance level as it has been hit multiple times and has sharply declined each time after hitting it. Also because forex trading is all about probabilities, I like the massive reward:risk ratio as you rarely need to win a trade with a R:R this big for them to be proffitable.
Can’t you see that price has formed a higher low???and also fundamentaly, don’t you think risk will thrive given to the fact that a deal has been struck in the white house concerning the fiscal cliff?
True there has been strong resistance around the 1.63 level but resistance levels have to break some time and as master gunner has said, this pair is in a bullish mode. It’s not clear to me what’s going to happen so sitting out for at least a week when everyone is back from the holidays to get back to full liquidity.
So tricky trading forex is like trading a country’s economy is a way right? So good reports for the US should boost the dollar but the US dollar is a “safe haven” so when the good news came out it sparked risk taking. So complicated.
I have a same trade setup in my mind(1.63 is a magical resistance :p) but i won’t go for it as risk aversion is absent in the markets.
Good luck for ya!
Thats why fundamental trading is difficult, are investors risk on or risk off? With the fiscal cliff deal being sorted, this suggests positive news for the US dollar and you could expect GBP/USD (stronger USD) to fall. But because investors (not just FX traders) saw the deal as bringing confidence and short term stability back (maybe?) in the US, equities rose around the world, suggesting investors are risk on and so the pound rose. This explained the big spike in price today in GBP/USD, as investors came out of the safe haven dollar but I expect at least a modest retracement and then continuation of the bullish trend, as the major resistance appears to be broken.
I shorted this yesterday at 1.60850 and if price closes down today then I’ll add to that short position when things open on Sunday…even if price gaps up on the open. It’s going down now after all…
I did end up adding to my short position on this. Now that price is going up again the first short was pulled out at break even and the second one is most likely going to be a loss. It also looks as if one of my systems is going to call for opening a long position.
My first positions got stopped out too. Took some profit beforehand tho. It’s funny because I recall posting I’d like to see it push higher to run the stops above that 1.63 resistance. Then I got greedy and hasty and entered anyway. Just to have price do what I predicted. I’ve re entered short took some profit already and sitting at 250 pips unrealized.
My entry was a combination of the commercial traders being heavily short, the 1.63 resistance and a seasonal tendency to make a high. My more recent entry is all the above plus the anticipated stop run and sucking breakout traders on long. I’ve already taken some profit. And I will collapse the trade an enter long when the same stuff happens on reverse or I get stopped out at break even. Either way I’ve already one :-D.
I do think you can trade solely on support and resistance but not as long term as I’m looking tho.