Daily Observations: March 01, 2013
- Short GBPUSD from 1.5145 (1/2), Stop at 1.5225, Target 1 at 1.5000, Target 2 at 1.4840
Typical Time Frame: 1-day to 1-week
Recently Closed Positions:
- Closed Long USDJPY (1/4) from 90.35 at 91.85 for +150-pips.
- Closed Long EURCHF (1/2) from 1.2018 at 1.2218 for +200-pips; net gain +341-pips.
- Exited Short GBPUSD (1/2) from 1.5145 at 1.5220 for -75-pips.
The GBPUSD short taken as a result of the 8-/21-EMA hourly crossover signal (in conjunction with a bearish 8-/21-EMA crossover on both the 4H and daily timeframes) has been a bit of a rocky ride, considering that 1/2 of the position was stopped out yesterday at the exact high of the day. While this is frustrating, it underscores an important lesson: during volatile markets, it might be best to reduce leverage in order to give one's self some slack with stops. The other 1/2 of the position, whose stop was just 5-pips higher (at 1.5225 versus 1.5220) was never hit.
Now that the AUDUSD and the EURUSD have started to breakdown further, I'll be looking to resell rallies, so long as the 8-/21-EMA crossover system continues to point lower on the 4H and daily timeframes and volatility remains elevated - necessary conditions my momentum trading system.
I also host a weekly Live Trading Q&A in DailyFX Plus, on Tuesdays at 07:15 EST / 12:15 GMT, in which I delve deeper into my positions and thought processes behind my analyses.
--- Written by Christopher Vecchio, Currency Analyst
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