Live Trade Update – GBP/USD

Filed under: Live Trades |

 

I have now cancelled the previously discussed order on the GBP/USD pair (the foreign exchange rate between the British pound and the United States dollar), and I would like to talk you through my reasons why.

 

Figure 1.

Figure 1.

To begin with, just to recap, take a look at Figure 1. This is the daily chart for the GBP/USD pair, and this was the only timeframe that we needed to look at for this particular trade setup. As you can see, there was a nice bearish engulfing pattern that formed at an especially strong area of support/resistance, thus confirming the strength of this support/resistance level, and confirming that the market had turned and had become bearish. However, as it was such a long black candle, and there is another level of support/resistance at the bottom of this chart that we don’t want our target to be beyond, I decided to put an order in to go short at a 50% retracement of that bearish black candle to achieve a better risk-reward scenario. But as you can see, this order has not been filled, and price has since moved downwards.

 

There was a little retracement action the day after the long bearish candle, however, it never quite made it to our entry level (although it was not far away!), and price has since started to move down with some force. If price was now to turn around and go up to our entry level, I would not really be comfortable being in this trade, as that would be quite a turn around in market sentiment. Therefore, I have since cancelled this trade, and will watch it from the sidelines. Sometimes, the best move is to stay out of the market, and you should only stay in a trade, or keep an order in place, if you are comfortable with what the market is doing.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>