Trading the GBP/USD Using Fibonacci's
Good Morning, First the fundamental data. No one cares about inflation, so you can forget about PPI. It came in under expectations, mostly due to an drop in oil prices. More importantly though, if it came in high, who cares. The Fed constantly reminds us that it isn't high enough to warrant any change in their accomodative stance. Your personal cost of living is a different story and the Fed doesn't care about it.
Retail sales - 2 months of dismal data. It was well below expectations today. Who can you blame for this? You! It is a gauge of your spending habits. Shame on you for acting conservatively and tightening up your purse strings. Get out there and support the economy.
Now to the technicals. Guess what, the SPX erased all of its 8+ point loss to now be up on the day. Yes, data is comig in soft enough that we are rallying on hopes of more QE. We have a better chance of taking out recent resistance at 1330 than support (in my opinion) due to the "rumorville trade". If we do pop up to the 1350-1380 level, it will be a gift and you may want to read up on your defensive strategies at that point. i.e. covered calls, protective puts, bear calls, etc...
Moving to the charts, I think you have a great picture of the SPX. Let's go to a day trading opportunity and the loveley "DOUBLE FALL LINE TRADE". As equities rallied, the USD weakens (inter-market relationships people!!). Using Fibonacci's can guide you to develop a trading plan to see if a pair is overbought or oversold based on where it came from. The GBP/USD rallied 50 points. Was it overbought at that time?
Past performance is not indicative of future results
Just to show you what the SPX did on the same timeframe, I will post a chart of today's gap lower and then rally up. As equities rally, the USD softens. When equities stop rallying, will the USD strengthen slightly?
Past performance is not indicative of future results
Watch tomorrow's unemployment claims.
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Happy Trading and Be Environmentally Cool
Coach Brian
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
