As we approached the London session today the British Pound found itself in a tight little price trap of lower high’s and higher’ lows against the USD. The distance between these high’s and low’s had reached a around 40 pip’s which is a rather small apex, indicating a nice technical break was imminent. What it did not tell us however, was which way the break would be. With these sort of setup’s it is usually best to await the break of the trap then trade the retest of the broken area, then go go go… Well in pre-London the Cable finally broke the trap to the upside convincingly. As we opened the London market in class we plotted the trade plan in it’s entirety and stayed glued to the pair until it finally reached this zone, which was also a nice Fibonacci retracement level, then put the plan into action. The trade started to work just fine and we found ourselves between 20-30 pips in profit yet staring the British Preliminary GDP News release in the face. Each trader had to make his or her own decision as to how to handle this, either get out, lock in break even, or leave the original stop in place (about a 30 pip risk). News is indeed event risk, and although everything about this trade plan was technical, the fundamental news certainly could take price either way. As it stands the news only helped catapult our Long on the British Pound to new heights, ultimately hitting our first major target of near 1.59. Sweet pips indeed no matter what GBP pair you chose.
FXBootcamp London Currency Coach-