MP FOREX ADVISORY

Archive for the ‘GBP/USD’ Category

This week, the EUR/USD, after more than two months below the 1.3000 level, finally re-tested this key psychological resistance. When the 1.3000 level was reached on Friday, strong selling pressure sent the pair back down to near the 1.2900 level, closing for the week around 1.2926. The EUR/USD has reached the 61.8% Fibbonacci retracement level from the high on 4/12/10. Moreover, the pair is approaching the 38.2% Fibbonacci level (around 1.3100) from the longer term downtrend starting from the high in December 2009. The pin bar daily candle that formed on Friday suggests that the recent uptrend is possibly in need of a correction. The GBP/USD had a high degree of correlation with the EUR/USD this week, evidenced by the substantially similar chart patterns. This suggests that the currency market is being driven more by news affecting the US Dollar rather than by news affecting the Euro Zone, which is good news for Euro bulls. It appears that market conditions, for now, have returned to a much more normal and stable trading pattern – with breakouts largely occuring in the European and US sessions and with generally flat conditions during the Australian and Asian sessions.  Such market conditions are conducive for the Master Pro Range Trading Model, which attempts to exploit the rhythmic and somewhat predictable sine wave patterns that tend to occur on many currency pairs during the late afternoon hours (US time) when institutional traders tend to be on the sidelines.  We intend to utilize this Model to our advantage once again next week.  We will keep you posted.

We ended the week with a couple of good breakout trades in the EUR/JPY – one of them was a short position taken on Thursday while the second was a long position taken early this morning.  In erratic fashion, as has been representative of the market we have seen over the past several weeks, the EUR/USD spent the first half of the week falling hard, dropping more than 200 pips, and the second half of the week was marked by an upward surge that was equally strong.  The GBP/USD spent most of the week consolidating, playing a range between the 1.5300 and the 1.5130 level before breaking out on the long side this morning.  A sustained break above the 1.5382 level, which marks the high of 3/17/10, could pave the way for a more susbtantial advance next week in the Cable.  We expect some great breakout trading opportunities over the next several weeks.  We will keep you posted.

This afternoon, an ill timed announcement by Kansas City Federal Reserve Bank Chairman, Thomas Hoenig, undercut our long positions in the EUR/USD and the GBP/USD, which we ended up cutting for a loss to protect equity.  Hoenig urged the Federal Reserve to increase interest rates to about 1% in the near future.  The challenge for our afternoon trading model  – namely an unusually volatile market – also brings tremendous opportunity to the trending application of the Master Pro FX system.  We expect to get back on track tonight by catching a ride on some established trends, particularly in the Yen crosses.

Monday, April 5 was a holiday for much of the world, which resulted in light trading activity.  On Tuesday, April 6, the Federal Reserve released the FOMC Meeting Minutes, which shook up the market late in the US session.  We managed to make some small net profits on our trading the first couple days of the new week, as we have primarily focused on the EUR/USD and the GBP/USD.  The combination of some poor economic fundamentals, including disappointing GDP numbers, along with continued concerns over the default of Greece has sent the Euro pairs reeling.  We will be paying close attention to some critical economic news, which will be released later this week including the British Interest Rate Statement and US Unemployment Claims.

This afternoon, we saw very little action.  We opened a few small positions in the GBP/JPY, which were closed for a net marginal profit.  We had sizable orders for two long positions in the EUR/USD and the GBP/USD a couple hours before the open of the Asian session.  Our EUR/USD order missed being filled by just a couple of pips while the GBP/USD trade missed being filled by only half a pip.  Both trades would easily have hit their profit targets.  While such experiences can be frustrating, patience is always the best course of action in trading.  We will be keeping a close eye on the British GDP report, which will be released early tomorrow morning.

The past couple of trading days have been quite challenging as we have witnessed higher than normal levels of volatility, which have proceeded right into the late hours of the US session – a period that is normally characterized by calmness and stability.  We ended up cutting a couple of trades for small losses – one in the EUR/GBP and another in the EUR/USD.  However, we were able to make ground back on Thursday as we grabbed some pips in a short position in the EUR/USD.  We also ended up roughly breaking even in trades in the GBP/USD and the USD/JPY.  News reports involving the Greek debt crisis keep hitting the market like a recurring bad dream - putting continued selling pressure on the Euro Dollar and injecting apprehension and instability into the market. 

Today, we made some profit on several trades in the GBP/USD as we played the tight afternoon range before the opening of the Asian session.  The EUR/USD is flirting with the 2010 low around 1.3433.  A break of that level could send this pair tumbling down to the 1.3000 level over the coming weeks.  The GBP/USD has also been under quite a bit of selling pressure since the 0:00 GMT open yesterday.  A worse than expected British CPI Report early this morning has not helped this pair.  Tomorrow, we look forward to the release of the US Core Durable Goods Report and New Home Sales.

Today we entered a short position in the GBP/USD at 1.5246 and made some good profit.  It has been a very erratic week in both the EUR/USD and the GBP/USD as we have seen substantial up and down daily swings.  The EUR/USD briefly broke below the 1.3600 level today, and it appears to be headed for further declines tonight.  A break of the 1.3580 level should signal more down side risk.

We saw quite a bit of choppy price action today.  The GBP/USD suffered early in the European session after the release of a terrible British Manufacturing Report.   The EUR/USD, after an initial drop to around the 1.3543 level, surged late in the European session to a stone’s throw away from the 1.3700 level before closing for the day around 1.3643.  We entered some trades today in the GBP/USD, which we decided to close for a very small profit after receiving an alert from one of our volatility filters.  Tomorrow, we will look to the US Unemployment Report, along with the US Trade Balance Report for direction.