Short spot position @ 1.4350. Targeting 1.42 support. Stop loss at 1.44. Also sold call @ 1.44 to expire the 19th of march. Premium payed to me for call: $2,220, the same as 220 pips.
I contemplated selling a put @ 1.4050. and covering the put with a spot. However, that would have capped my gains at about 250 pips and I really see the GBP falling quite alot in the near future. Fundamentals are very bearish this pair, even more so than the eur/usd
The market needs to close below 1.42 today for bearish possibilities to remain. Moving my stop loss back to 1.4250. A close above 1.42 and I will start covering calls @ 1.42 and 1.44
GBP/USD So far the Daily resistance level of 1.42 has held up. As of writing this price action has fallen down to 1.4145. There are now several intraday areas of support that need to be taken out. (1.4130-50, 1.41, and 1.40.) The BOE interest rate announcement will take center stage tomorrow with the BOE expected to cut interest rates by 50 basis points. The questions are, has the market priced in this interest rate cut?, and how will the market respond? Will the markets see the cut as helping to revive the ailing British economy or not enough. During bull global market conditions, a rate cut would have been viewed as pound weakening;however, current bear global market conditions throw this into reverse and the cut could be seen as pound positive in reviving a struggling economy. However, I think that the market has bought the rumour of the pound rate cuts and will sell the news as they will be pessimisstic that the rate cut will be enough to revive the economy. So I am watching for a close below 1.40 on the daily chart to continue the downtrend towards 1.37 and then 1.35. However, on a break obove 1.42 I will look to cover my calls. I will not lose my medium term bearish bias for the pound, but I would expect a rally up to the trendline shown on the daily chart posted above. USD/JPY My Usd/Jpy trade is working out well and I cant wait to collect come the 19th and take a longer term bullish stance on this pair and other short yen opportunities. 99.50 should provide some good resistance to this pair but I will be buying on the dips. EUR/USD I am waiting for this pair to either break 1.2330 on the daily so that I can short it down to 1.16 or return to the 1.30s. There seems to be alot of support for the euro but ultimately I expect it to break down as risk aversion returns to the forefront. With so many job losses I don't see consumers able to stimulate the economy any time soon.
Price action was rejectected off of the 1.42 resistance level so we are still in a daily trading range between 1.40 and 1.42 waiting for breaks and favoring the downside. Tomorrows nfp announcement might lend more strength to the dollar if the numbers come out worse than expected and bring about that break below 1.40. You can see yesterday ultimately finished with a doji, after being rejected off of 1.42 and bouncing off the 1.4050 zone.
As of writing this price action has reached 1.4175. I am expecting a test of the 1.42 region. Hopefully this resistance level holds and reverses price action towards 1.40. If not I will begin to cover my calls.
As glad as I am that I stayed in waiting for an official close above 1.42 and as much sense as this might make on the daily chart. Sometimes price action like this just makes you say. "wtf?" It seems so delayed. Dow is down just a bit. There must either be a change in sentiment or its just friday. I'm closing my short from 1.4132 here at 1.4089. Even if price action closes like so it will ponting to a very bearish bias, I think I've overextended myself a bit and should be more ready to cover calls should the market turn bullish.
We have a very bearish looking candle ending the week. As you can see price action was rejected from the 1.42 level and failed to close above the level in fact it ended up closing at 1.4090. We need to see a break below 1.40, but I'm optimistic for a break move to 1.35 or 1.37 some time next week.
I sold the call because I don't believe price action is gonna go to far above the 1.27-1.2740 level since that region is a resistance level on the daily chart and fundamentals are still bearish eur/usd. So basically I'm trading where I don't think price will go. If it continues to channel or go down, I make money. If it goes up I cover and still keep the $1,110.
I exited my short from 1.4067 just now at 1.3753 for a 314 pip gain - rollver costs and pip spread. But basically about a $3,000 profit. Plus the short I closed out from 1.4132 last friday too 1.4089 for a profit of 43 pips minus spread so $400. So altogether a profit of about $3,400. I will get back in on a any rallies and make a new target for 1.35. The BOE has decided to start the quantitative easing process which should continue to help drive down the value of the pound. My calls on this pair are looking pretty safe.
Base on a fibbonacci retracement from this most recent fall from 1.41 to 1.3740. 1.3885 would be the 38.2 retracement and has daily support about 70 pips behind it.
