My Forex Trades On GBP/USD This Morning

After a shaky start Sterling won back much of yesterday’s (Wednesday) losses. And after an equally shaky start gold remained shaky.

It’s amazing that with so much news around I’m struggling to get to grips with the markets. And, irony of ironies, but it’s been my old adversary the gold market that’s put bread on the table this week. I dipped my toe back into the currency market this morning, trading GBP/USD in both directions, but I’m struggling to find a meaningful bandwagon to leap on.

I haven’t traded the FTSE (^FTSE) since I surrendered my short position too early. My trade-mark trade used to be betting once too often at the end of a trend and, although I’m not calling a turn in equities, I am wary of re-opening a short that could easily soon be 200 points off-side. Equally, I don’t feel brave enough to but equities yet.

My two forex trades this morning added a few quid to the coffers but, as I’ve explained over the past week, I’m keeping things tight on low-conviction trades.

My sell bet was an early-morning venture, selling £2 when the price broke below $1.42. I closed out £1 at $1.4165 for a £30 profit. But that was it and my stop at break-even was hit soon after that.

A moving average crossover (recently featured in Finding Trends in Markets) triggered my second trade. My past two ventures on the long side of GBP/USD have cost me a few quid, so I was in no rush to jump in this morning.

One of my trading signals is the price crossing the 21 MAV, supported by the RSI indicator. Today, I waited for the stronger signal, the 21 MAV crossing above the 50 MAV, again supported by the RSI. On both strategies I wait to trade 10-pips away from the moving average; this cuts down on some of the ‘whipsaw’.

So I bought £2 at $1.4228, closed out £1 at $1.4258 on the way up and was stopped out at the same level on the way back down. Not a ‘fat cigar’ day but a further £60 on a tight bet. Sterling took advantage of a quiet lunchtime to burst back up through $1.43, but it’s still not a compelling pattern.

It says a lot about the markets that I’ve been ducking and diving in the gold market, not a traditional hunting ground for me. I’ve been trading both ways, but with a bias to the downside. Down around the $940-950 area I’ve only been trading £1 bets and have regularly taken profits too soon. This is a sure-fire recipe for losing the lot on one misplaced trade so I’m calling time on that until I get confirmation of a more definitive move.

Today, the price has been testing out the 21-day moving average; I’m waiting for a clearer indication of whether support holds here or whether we take a trip down to the 50-day moving average at $890.

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