Daily Observations: July 25, 2013
- Short AUDUSD (1/2) at 0.9164, Stop at 0.9350, Target 1 at 0.9045, Target 2 at 0.8960 [total risk = 93-pips/full size position]
- Short GBPUSD at 1.5390, Stop at 1.5390, Target 1 at 1.5280 HIT, Target 2 at 1.5170, Target 3 at 1.5030 [total risk = 0-pips/full size position]
Typical Time Frame: 1-day to 1-week
Both my AUDUSD and GBPUSD trades are active now with the former having been entered as planned yesterday on the daily close. In light of the fact that the AUDUSD's daily close (0.9164) had made modest progress away from my ideal selling point (0.9220), I only took a 1/2 position and will look to increase up to full size on any rallies. 0.9220 remains my ideal selling point, and I will add there to bring my net position average open to 0.9192.
While the short GBPUSD is making progress neatly in the wake of the 2Q'13 UK GDP report, the AUDUSD position is modestly underwater. However, both pairs are behaving in ways that resemble a top: the AUDUSD formed a daily Bearish Key Reversal yesterday amid daily RSI bearish divergence; and the GBPUSD has broken down out of a Bearish Rising Wedge. (As noted on the GBPUSD chart, an intraday rebound may gather pace.)
As per one of my bedrock trading rules which I noted yesterday - never be afraid to reduce risk in favor of taking profit - I've moved up my Stop on the short GBPUSD trade to my Entry at 1.5390, now that Target 1 at 1.5280 was hit. At this point, in the wake of the 2Q'13 UK GDP report, if the GBPUSD were to reverse and trade back to the weekly highs, I wouldn't want to be short regardless.
I also host a weekly Live Trading Q&A in DailyFX Plus, on Tuesdays at 06:00 EDT / 10:00 GMT, in which I delve deeper into my positions and thought processes behind my analyses.
--- Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail email@example.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.