Tag Archives: trading tips

Cable at Inflection Point

We are awed by the trading possibilities of the GBP/USD daily chart at the moment. We see amazing opportunities to make money long or short depending how the market breaks.

GBPUSD Aug 16

GBP/USD Daily Since Jan

Cable hit the highest since May on Tuesday but it only exceeded the prior high by one pip before slipping back below 1.6450. The area around 1.6475 has now become a critical inflection point. We see a minor bias higher because the break lower after the first two tries at 1.6474 was rejected so aggressively. What makes us hesitant to buy is the lack of follow-thru above 1.6475 on the break.

If cable does break above 1.6475 we don’t expect 1.6547 to offer much resistance. Instead, we anticipate a straightforward rally to 1.6747 and a likely test of 1.7000.

We are in no rush to jump in here. We may see a slide all the way down to 1.6325 before we get the conditions to rally. We will buy on a break above 1.6500.

Alternatively, if GBP/USD falls below 1.6300, we will sell on expectations of a move back to 1.60, or lower.

In either case, we expect to make upwards of 200 pips, so we can afford to be patient.

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Debt Ceiling Hiccups to Come, Sell USD/JPY

My initial impressions on news that Obama and the Senate have agreed to a framework on the debt ceiling are here: http://ashraflaidi.com/forex-news/

 

As a trader, I want to use the positive sentiment that has built up here to sell USD/JPY. The pair is trading at 79.21 and that will be my entry point. The initial target is 78.50 and unless the newsflow starts to change, I will be selling there. My stop is at 79.56, which is a bit tighter than I like but on an event-driven trade, it’s probably prudent.

 

Here’s my reasoning. Every story I’ve read late on Tuesday sounds like an agreement is just a matter of hammering out some details and drafting a bill. That is NEVER the case in US politics. The moment some kind of consensus builds, every power-hungry politician will look to insert his/her input. I think it will only take a minor hiccup to send USD/JPY to the initial target. What’s especially instructive is that despite the incredible volume of good news and risk appetite today, USD/JPY was only able to climb 15 pips. Sellers in control of this pair and I’m selling with them.

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