I Haven't Abandoned Forex, Honestly!

I've been way to busy for myself the past 2 weeks! The MBA taskmasters are taking their due out of my hide and my time. Work has also been bananas, so I haven't had the will or energy to continue my forays into the world of Forex. I hope to squeeze in a real entry sometime over the quickly approaching Memorial Day Weekend.

Keep on Pippin'!

Weekend Recap

I thought I'd check in and update the world on my latest Forex exploits.

Clearly my Thursday idea to sell fell through, as the market decided it was done punishing the Cable because of the Fed's decision to raise interest rates. Unfortunately my decision to spread the stop wider resulted in a bigger than usual 40 pip loss. But all was not lost, as I did get a winning 20 pip trade in around 8:30 AM.

The Sterling has continued its tear as it approaches 1.90, its highest level since April of 2005. Its already encountered resistance at this level, and may continue to do so, according to the report by 4Cast. Right now, the Cable is at 1.8960. Here comes another of my genius ideas: buy now, and exit trade at 1.9000.

We'll see how this one turns out...

Fed Day

The big news today is of course, "Big" Ben Bernanke and the Federal Reserve Board's decision to raise rates for the 16th consecutive time, pushing the funds rate to its highest point in 5 years. (News coverage) Future rate hikes will depend on economic data indicating an increased threat of inflation. I imagine that will place even more importance on forthcoming fundamental data between now and June.

On the Forex market, particularly our currency pair of interest GBP/USD, the rate increase brought out the action. The market was slow until the news came out, at which point the Cable slipped, rebounded, and has been in a steady decline since.



I see an easy trade coming up, as the European market hasn't had a chance to react to the rate hike en masse. After they push it lower in the wee hours of the morning, price will probably continue its previous upward movement. I'm putting my trade in now: I'm stepping out of my comfort zone a little and going for 40 pips. S/L at 1.8584, T/P 1.8504.

I almost neglected to mention that I did some impulse trading at the time of the Fed announcement. This time I got off lucky, posting a 15.6 pip gain. I should probably make a rule not to do that in the future.

1 Winning Trade,
+15.6 pips

A Quiet but Winning Tuesday

My trade went well today and netted me 30 pips. Good times, indeed.

There wasn't very much fundamental data to come out today. Tomorrow, however, "Big" Ben Bernanke will meet with his FOMC coevals to raise the fed funds rate for what most are forseeing as the last time after 16 (?) consecutive rate hikes. I think this will cramp the Sterling's style briefly, but this won't happen until 2:15 pm tomorrow. After that, there will be some downward pressure on the GBP/USD pair for Thursday's European session.

What should we do? The prudent speculator would most likely stay out of the market tomorrow, as volumes will most likely be low ahead of the rate announcement. I'm going to play the conservative card and sit tomorrow out, at least until shortly before the rate announcement. It's really tempting to try to get a trade in early, but I'm going to resist the sweet temptation! I know enough to know my own greed will always be my undoing.

With that, Happy Fed Funds Rate Hike Day!

(Hopefully it will be the last one for the forseeable future.)

Start of Another Glorious Week

Another week is upon us...



Friday's trade didn't go quite as planned. After my buy order got filled, the Sterling was confined to the 1.8470ish to 1.8525 range, which was enough to hit my 30 pip S/L. When the 8:30 am US jobs report came out weaker than expected, price rose rapidly to 1.8620s before closing just shy of 1.8600 for the week.

To start this week, the Cable went as high as 1.8690 before retreating to its current 1.8580 level. How much higher can it go? The Fed seems to be moving toward one more rate hike on Wednesday, which will probably cause a temporary setback for the Sterling. After that, who knows? The good folks at BabyPips.com see price finding support at its current position, and even pushing higher to 1.9200. Graph courtesy BabyPips.com.



On a much shorter timescale, what's going to happen tomorrow? Not much on the fundamentals. I wouldn't be surprised if volume slowed down some what in anticipation of the Fed's rate decision on Wednesday. More importanly, the markets will be closely watching to see if there are any indications of continued rate hikes or if the Fed will stablize the rate. I expect the Cable to rise tomorrow, but not exceed Monday's high. Therefore, I'm buying at the pivot point of 1.8610, and setting my T/P and S/L 30 pips out.

Good night and good luck.

Quiet Thursday

Bummer! My buy limit order was cancelled just before the Sterling made my move. Had my order been filled, I'd be 30 pips richer right now.

Anyhow, the Bank of England left rates unchanged, which had pretty much no effect on price. However, at 2 PM something happened, as price shot through 1.85 on its way to 1.8550, before falling back to around 1.85. Despite my desperate searching to find the catalyst for this movement, I can find nothing.

I have concluded, however, that the Cable is still good for buying, despite it having already encountered resistance near 1.8550. 4Cast feels that price will rise before retreating again, and I agree. Therefore I'm buying at 1.8515, with a T/P and S/L 30 bps out from there.

I know I sort of ignored the presence of fundamentals for this trade, the practice of which is unadvisable. But given the US market's strange 2 PM action, I think the European market will do the same when given the chance. Therefore I'm hoping the Europeans will give the Cable a buying boost before the news comes out.

See you tomorrow.

A Winner!

I love it when a plan comes together! I got my 30 pips after my buy order got filled; from the looks of things I could have ridden the Sterling higher to R1, near 1.8476, another 40 pips. I'm not complaining, though, as I did get something for the trouble.



The Cable was range-bound today between 1.8342 and the 1.8475 area. This is no doubt due to the major resistance to be found at 1.85, as double-zeros seem to make traders jumpy. Judging from the info to be found at 4Cast and FXCM, this area will continue to mark a consolidation point in the meteoric rise of the Cable. And given that price today obeyed the 1.8476 level, I will be buying tomorrow and selling near the 1.8475 area. Hopefully my order will be filled and closed before the Bank of England renders their interest decision tomorrow around 7 AM EST.

I'm buying at today's pivot point at 1.8413. I'll take profit at 1.8443 and stop the loss at 1.8483.

After 1 trade today,
+30 pips.

Its Tuesday Already?!

Man, this week has absolutely blown by! I managed to stave off the hobgoblins of inconsistency and laziness for a while, but they seem to have the run of the place lately. I managed to keep this blog semi-updated for an entire month, which is pretty much a major victory for me.

Anyhow, last Thursday my trade idea was never filled, so there's nothing new to report there. The Cable has been on a serious bullish run of late, breaching January's high in the 1.7900 neighborhood, and even moving on up to 1.8400.



Apparently the news has been bad for the dollar recently, and its taking a beating. Broader economic factors like the above $3 a gallon gas surely cannot be helping. Then there was yesterday's "Day without an Immigrant" where the newest Americans decided to stay home and not spend money. So there's all kind of stuff going on.

Where the Cable is headed from here is anyone's guess, even moreso than usual. 4Cast is looking for some 1-2 day drifting slightly higher, but without any major moves. 1.8500 is the next level of technical resistance going back to last September's high. I should probably sit tomorrow out, but I'm getting a good feeling. While a retreat is probably not too far off, in the near term, I'm buying. Price is currently around 1.8400, and when it gets near 1.8407 (mid point between pivot point and R1), I'm buying. 30 bps stops and losses in respective directions.

May Recap:
9 Trades, 4 Winners
-29.5 pips