Wednesday, May 11, 2011
Trend for 11th of May 2011
Very interesting price action in British pound pairs! I hope you knew that there was very important fundamental news scheduled (Bank of England Inflation Report) at 9:30 GMT. The market reacted very positively initially and you would be on the right side by going long in pound pairs (gbp/usd, gbp/jpy). Gbp/usd rallied a little bit over one hundred pips and gbp/jpy around 150 pips before a sharp reversal took place. Anyway, the rules for entering the trades in the above mentioned pairs were very easy to implement.
Let’s take gbp/jpy as an example. I marked the level of 132.80 yesterday as a possible point for going long after the news. The level was not breached up to the news. So, a few minutes before the news you just had to place a buy stop order and go with the market till an even number of 134.00. Even numbers are places where ‘big dogs’ exit their positions to cash in profit. Nice profit of 120 pips. These kind of moves usually happen one or two times a week. That’s why I always have news trading strategy in my arsenal. Why miss such big opportunities! I have no intentions of doing that.
As you can see commodities also collapsed (have no idea why pound and commodities collapsed). An exit for silver had to be around 38.80 level. When you know that news of that importance is released you’d better move your stops to protect your profit. Of course, if you are a long term investor, it is no problem for I believe that commodities will continue going up and if they continue going down I would buy them. That is of course, my subjective opinion. Do your own homework and follow your reasoning. I am still silver bullish. Oil will also continue going up after the correction is over.
Read my previous post:
Follow the leader in a big move