Trading Forex – Cable Below Key Level

Posted on 13. Jul, 2011 by in Forex Signals, How To, Random Noise

Trading Forex is not about being good at spotting the perfect trade, mastering technical analysis, being a fundamental expert, etc. The important aspect is being able to combine several different elements in to a solid trading approach.

Trading Forex – Bias

Mainly based on latest headlines out of UK, CPI disappointed giving us further downside on Cable, and is somewhat indicative of an unchanged interest rate for next month. Along with this, we are currently seeing a strong risk aversion in the market, mostly due to the current situation in Europe, but also the latest NFP release (although this might seem a bit counterintuitive). Because of this, I think further downside on the pair is very likely, specially with the current technical state of the pair.

Trading Forex – Technical Perspective

This is where, in my opinion, this pair get really interesting. First of all, the pair broke the all important 1.6000 level and is currently trading at 1.5930 level. We had a very clean break of 1.6000 and a strong continuation afterwards probably due to a lot of stops getting triggered. Now we had a decent pullback and the pair looks perfect for a short trade.

A short trade from this level seems to be a very good idea, in particular as a swing trade, but also for short term trades if we see risk flows coming back into play this morning around London open.

Trading Forex – Ideas

With the above mentioned aspects in mind, I am only looking for a short trade on this pair.

From a swing trade perspective I think this would prove to be a very good level for a short trade. Something around a 50 – 100 pip stop and we should be in for a very favorable risk:reward setup. I am already in on a short term short trade from yesterday, and if you want to get in, I suggest keeping an eye on risk sentiment around London open. If we start seeing a strong dollar, swiss franc and JPY, a short trade should be in the cards. Keep an eye on price action in order to pin-point a good entry level.

Related posts:

  1. Trading Forex – Cable Up for Further Downside
  2. Trading Forex – Cable Upside?
  3. Cable – The Week Ahead
  4. Trading Forex – Currently Long on EUR/USD
  5. Trading Forex – EUR/USD Down to 1.3700

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