While the Euro was quiet on Monday, the Pound came under pressure after economic data from the UK. The PMI manufacturing came in at 56.7, short of the forecast of 57.1. While it is a small gap, this simply served as an excuse to start a selloff in the Pound, which, until now, had been stronger than other majors. I think it simply “catching up” with other currencies, particularly visible in the GBP-JPY. With all other Yen pairs falling, the beast had been “holding out”, but it looks as if on Monday it caught up with the others. More on that a little later.
In the last post I mentioned a trade in the EUR-USD in early trading. The idea was to wait for a new low amd then buy it at the sight of first bullish reversal candlestick pattern on the 1H chart. Well, there was no new low, the price tested 1.3480 several times but failed to go any lower. After few hours, I bought the EUR-USD at 1.3485, still looking for 30-40 pips. There was very little in terms of risk on this trade.
Eventually, volatility picked up, even if not by much, and the price started to move my way. Nothing spectacular, it took seemingly forever, but the trade eventually produced 37 pips. Decent small transaction.
While another trade from yesterday, a buy in the CAD-JPY did not materialize, my longer-term focus on the GBP-JPY paid off. I had a series of good trades here in the past several days and today’s sharp move down closed this one. It was short in duration, established only on Friday, so it came to a quick conclusion for a trade based on 4H chart. From now on, we might have to switch to the daily graph to see if there is more downside potential.
Mike K.