Good Morning, Friends. The Bank of England’s Monetary Policy Committee met today, and left interest rates unchanged, as expected (the vote was 9-0), and also voted unanimously to retain the current level of Quantitative Easing (QE). The statement pointed to signs of health in the economy, and also noted the beneficial effects of a strong Pound on the outlook for inflation.
Cable (GBP/USD) has been trending higher for some time, and friends indicate that it is still underowned by many institutions. Still, this is one of those “escalator up, elevator down” trades that can turn septic in a hurry. There’s plenty of liquidity as people are gradually getting long, but it dries up when they are all trying to exit simultaneously. All of which is a long-winded way of saying that although I’m sorry that I’m not long from better levels at present, I’m not seriously tempted to try buying it here.
Fiboncacci confluence suggests that something just above 1.57 on the daily chart would provide an entry with a decent risk/reward ratio. That may seem impossibly far away, but the price was at that level just over a week ago. It would involve a pullback, at present, of roughly 1.6%, hardly an impossibility. One of the things that I’ve learned by watching Todd’s daily E-mini updates over some years is the virtue of patience, of being willing to possibly miss a trade in order to obtain an appropriate setup that offers a real chance to make some money. That would be applicable to trading Cable, as well.
Best of luck today, and remember, the Fed announcement at 2 PM EDT will be followed by Dr. Bernanke’s press conference half an hour later.Â
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