Multi-Day Long Attempt
Updated
Long GBPAUD after some nice consolidation at the low Thur/Fri last week. We've been in a Daily range since mid September and after a recent top to bottom move we've seen accumulation at the end of last week, as shown on the 30m TF with the double bottom spikes.
Profit target at the Daily range high at 1.9300, but there is a scenario where we break it? More on that if we get there!
Long Swap on my broker has been averaging 0.05% over the past month, so happy to hold for several days. Stop below S/R flip from pre-market given at 4.22:1 RR. It is important this holds today, but any further at the RR isn't good enough for the time horizon.
Profit target at the Daily range high at 1.9300, but there is a scenario where we break it? More on that if we get there!
Long Swap on my broker has been averaging 0.05% over the past month, so happy to hold for several days. Stop below S/R flip from pre-market given at 4.22:1 RR. It is important this holds today, but any further at the RR isn't good enough for the time horizon.
Trade active
Entry filled at 1.90309Trade closed manually
10% Taken at 1:1 to "pay myself" on the trade. Overnight risk with the AUD rate decision so currently debating if to move stop to B/E for eliminate overnight risk. Will see how price action develops.
Note
I've made the decision to move the stop to B/E given the uncertainty over the AUD rate decision which gets released at 3:30am London time. Marc Chandler, Chief Market Strategist at Bannockburn Global Forex wrote - "In Bloomberg's survey 21 of 24 economists surveyed expect a 25 bp rate hike. The futures market is less confident. It shows slightly more than a 50% chance"
In addition to the futures market pricing, we've only seen two example this year where rates were raised on the expectation of a rise, with February resulting in a ~100 pip drop and March resulting in a ~100 pip gain. Other examples of rises had positive affects on the AUD, but none of them were forecast.
So a difficult decision to make because I think the trade setup is A+, but you can't get married to it and there is enough data pointing to at the very least some volatility, and at worse severe downside.
Trade closed: stop reached
Stopped out at B/E at 19:40pm. Interesting to see the reaction to the rate decision, but looking at the spike lower on release we got within 5.5 pips of the original stop placement had we not moved to B/E. Normal spread is around 2.5 pips, so although I can't tell what it was at the time of that spike, I would be very surprised if it didn't stop you out there due to the widening spread during the reaction.
Overall I thought the idea was really well supported technically, and looking at price running higher now is positive for our understanding, but once again the mechanics of a traditional trade make this kind of thing very difficult. Unfortunately my broker only offers Options on the top 6 major FX pairs.
Note
Just a quick update to say I was able to access the historical bid/ask spreads and during the 3:30am news event, the average spread was 3.72 pips, but the maximum was 42.10! I don't know exactly when that was other than somewhere between 3:30 and 3:45am but traditionally the spread widens at the very start of the new candle and slowly drops thereafter.
With this in mind I don't think there was any way to survive the new fuelled spike had we left the stop in it's original position.
On to the next one!
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