Currently 6 trades for 50 pips each were complete for 300 pips. The last USD/CAD short from 1.3196 hit target this morning at 1.3135 for the last of the 6 trades. Two long GBP/USD trades remain and are deeply underwater at 1.3106 and 1.3153 as I got caught in Friday’s CPI. I’m watching oversold GBP/USD at 1.3090’s break then GBP/USD heads higher which means 1.3107 is okay and reevaluate for 1.3155. At worst I’m looking for break even. I didn’t realize until this morning of the 6 trades, 1 trade was a long and the other 5 were shorts. I want add to long trades for a balance. I also realized USD/CAD, GBP/USD and GBP/CAD completed the 6 trades. Time to change the mix for diversity. The overall goal is just 30 trades, 50 pips each for 1500 pips overall. We had a rocky start but the trades were done. What I need to do now is really get busy and hit targets properly. Last, these trades are extra to my day as I send 7 pairs per day, 3 times per day.
My thinking to change the mix is focus on GBP/JPY, GBP/NZD and maybe NZD/USD?. EUR/USD and cross pairs won’t perform. I’m open for suggestions. Why GBP/JPY is because its a JPY pair and because it correlates to GBP/USD at 99%. Other JPY cross pairs correlate negative to their underlying pair such as AUD/JPY, EUR/JPY and NZD/JPY.
GBP/JPY. The problem with current price is 132.99 is tops and a break opens the clear path to 133.49. For the daily model to reveal such a top, it means 132.99 won’t break and current price is to close to the top. I’m looking at long from 132.00 to 132.09 or even lower at the next lower break point at 131.86. We would then look to targets at 132.80 area. The second problem with current price its pretty well balanced at 132.50. Ultimately to go long for an extended period and many pips is to long at 130.82 or short at high 133’s.
The current base in GBP/JPY is 130.14 Where GBP/JPY sits is top uppermost channel is located at 134.94 with must breaks at 133.82 and 132.80 to 132.99. A break of 130.90 below begins oversold then comes a huge drop to 129.84 so 130.90 below is a vital level.
The overall disposition with GBP/USD and cross pair rises is USD/CAD is overbought yet has many strong resistance points below to hold USD/CAD in small ranges. GBP or USD must break the dead lock to get the pairs moving.
Brian Twomey, Inside the Currency Market, btwomey.com