Howdy Folks,

I hope you had a great trading week! Today’s post will walk you though a GBP/USD trade that started on Wednesday evening and ended only a few minutes ago. In my FX Street webinars I discuss a trade setup I call a bargain day. These bargain day setups often represent an opportunity to enter with an existing trend at a discounted price. Let’s look at the setup.

The Bargain Day

On Wednesday the market closed below the HMA which was trending higher. This represents a potential bargain day opportunity to get long with the existing trend at a discounted price. Usually I look for a trend trade opportunity and use Fibonacci extensions to calcuate a profit target, but in this case we I knew GBP/USD was dealing with major resistance on the weekly chart so I decided a retracement ratio was in order.

The Entry

Understand I’m a big support and resistance trader, I only use bargain days as a guide to warn me a potential support and resistance trade may exist. I prefer to work along the extreme edges of price but when I can’t do that I have to work with what I have. In this case, the support and resistance landscape was ugly. I decided to split a demand level around support shown last week and the round number of $1.65. The entry was long at $1.6520. For a profit target, I drew Fibonacci retracement ratios from the high preceeding the bargain day to the low. This morning the profit target was just missed. Knowing that GBP/USD is struggling with resistance on the weekly chart I decided to pull the trade for a profit of 131.8 pips.

If you haven’t been able to attend my FX Street webinar I hope this post helps illustrate what a bargain day is, and how I use them.

When is the Next Seminar?

I’ve had to cancel several seminars lately so I am working with FX Street to find a time that works better for everybody involved. Also, I’d like to get the seminar later in the day so people who work a day job can actually attend since they are not recorded. I will post on the blog when the next seminar is coming up so you can register with enough time. Right now, we are looking at 4pm Pacific which hopefully will be a bit better than 12 pm Pacific for folks in the U.S.

Have a great weekend!

Ryan

Howdy Folks,

Our currency of choice, GBP/USD, seems determined to make a run at previous resistance around $1.70. Today’s price action poked $1.66 and found enough demand to drive prices above $1.67 again. The immediate price trend as measured by my trusty HMA appears to be intact and poised to move higher, but entering now is too expensive for me. I’m cheap and I like a good deal. I’d prefer to see price closing against the prevailing price action trend as I have regularly discussed in my webinars on FX Street. The daily price is currently above the HMA while trending higher along the Bollinger Band median (20 SMA) on a lower time frame (4 hour). Not surprisingly, the market isn’t at an extreme of overbought or oversold as measured by the CCI oscillator. Without a dirt cheap entry price I’ll be out of this currency pair tonight. After the news is released tomorrow morning, it wouldn’t surprise me if $1.66 or $1.6650 is jabbed one more time before a move higher. If $1.66 falls however, the weekly resistance we talked about yesterday may be setting up for a move lower.

Charts below…

More thoughts tomorrow evening, best of luck to you intraday players!

Ryan

IMPORTANT NOTICE: These comments are for information purposes only. My opinions or other information contained in this post do not constitute investment advice. It should not be understood as a direct recommendation to buy or sell any currency contract or other investment vehicle. Forex trading involves substantial risk of loss and is not suitable for all investors.

Howdy Folks,

Big day today, equities up another 200 points on the heels of the G20 summit over the weekend. Apparently the markets like the idea of even more cheap investment capital being promised by the G20. GBP/USD, our currency of choice to cover in this blog had a great day as well, up about 150 pips by my daily candle’s range. The resistance at $1.67 has been broken and now we are trading around the key resistance pivot. I personally think a pull back is in the works before the pair moves higher on dollar weakness. I think a test of $1.67 would be appropriate, but nothing is a guarantee. As a bargain hunter today marks a day of in action.

The charts attached to this post are just some rough planing guides as to what might play out over the next few weeks.  Notice that GBP/USD turned higher along the 38.2 percent retracement ratio last week, this may put the 138.2 percent extension ratio in play if the GBP moves higher. If the resistance barrier holds, perhaps a move back to 61.8 percent is in the works. I think onward and upward is the likely path.

Best of luck, more tomorrow.

Ryan

IMPORTANT NOTICE: These comments are for information purposes only. My opinions or other information contained in this post do not constitute investment advice. It should not be understood as a direct recommendation to buy or sell any currency contract or other investment vehicle. Forex trading involves substantial risk of loss and is not suitable for all investors.

Howdy Folks,

I have a schedule conflict this week so there will be no webinar today. I have rescheduled the webinar for Friday, the 6th at 20GMT which is 3pm Eastern Time. If you would like to attend, please visit this link and regsiter:

http://www.fxstreet.com/live/sessions/session.aspx?id=aba67ad4-5fea-4b6a-8f46-bbdadb68be7f

Hope to see you there!
Ryan

Howdy Folks,

Opening gaps do not happen as often in the spot market as they do in exchange based markets but occasionally the Sunday open can hand us a nice trading opportunity. I think the best presentation I’ve seen on trading gaps in the spot market was done by Sam Seiden at FXStreet.com titled Professional Gaps vs. Novice Gaps in the Forex Market. If you would like to know the difference between a “novice” gap and a “professional” gap I encourage you to watch Sam’s presentation:

http://transcripts.fxstreet.com/2009/02/professional-gaps-vs-novice-gaps-in-the-forex-markets.html

This novice gap has offered approximately 100 pips since it formed one hour after the Sunday open.

Best of luck this week,

Ryan