Trade idea: 2013-1-30 0:30
Well, well, well, it looks like the trade setup I've been waiting for on GBP/USD's 1-hour chart has finally materialized. If you recall, earlier this week, I mentioned that GBP/USD could soon stage a pullback after posting a new low below the 1.5700 handle.
With price stalling right under the 100-SMA and Stochastic showing that conditions are overbought, I've decided to jump in on a short. To protect myself from adverse market moves, I've set a stop at 1.5815, which is just a few pips above the 61.8% Fibonacci retracement level. As for my profit target, I'm initially aiming for the previous swing low, but I'll ultimately go for new lows.
I'm not worried about the pound's comeback yesterday. The fundamental landscape is still pretty bleak for the currency. If you're a fan of Forex Gump like myself, you probably also know that the U.K. economy printed a much bigger contraction than what analysts anticipated and is even at risk of a triple-dip recession!
We have a few event risks for the U.S. that could move GBP/USD such as the advance GDP, FOMC, and NFP reports. I have to admit that I'm not entirely sure how they could move the dollar in the next few days. However, I'll be sure to be on my toes for them so I can adjust my trade accordingly.
I sold at market (1.5753), SL at 1.5815, PT1 at 1.5685, PT2 yet to be determined. Risk disclosure.
Cross-posted from my blog, The Loonie Adventures of a Forex Noob.