RUNNING MARKET COMMENTARY 8/26/08 (GBP/USD Pullabck)

[BostonFXtrader]

With the USD still looking pretty strong, I began to look at past moves of this magnitude to see where this move could end, and where we can gain from the pullback. I found a few similar moves in the past couple of years and I calculated to see where this may end and potentially rebound. The following data table is just a trade thought and I do plan on putting this trade on but Hurricane Gustav and Englands' PMI data on Monday may sway me to be a little more careful or aggressive at this time .

1st MOVE
INITIAL MOVE UP
Beginning April '06 = 1.7200
Mid May '06 = 1.9000
18 Big Figures or 10.5% move up

THE REBOUND
Mid May '06 = 1.9000
End June '06 = 1.8100
9 Big Figures or 4.7% retreat


2nd MOVE
INITIAL MOVE DOWN
Beginning November '07 = 2.1150
Mid January '07 = 1.9350
18 Big Figures or 8.5% move down

THE REBOUND
Mid January '07 = 1.9350
Beginning May '07 = 2.0400
10.5 Big Figures or 5.4% rebound


CURRENT MOVE DOWN
INITIAL MOVE
Mid July '08 = 2.0150
Currently trading at 1.8250 or 19 Big Figures = 9.5% move down

The Rebound is going to happen, it is just a matter of where?? I believe a good spot to enter my bid would be 1.8125 area with a STOP LOSS at 1.7900. If the REBOUND is anything like the past, we could see a 5% move back up or 9.5 Big Figures. That a tremendous move, but not out of the question to see GBP / USD move back above 1.9000.
So to recap, I recommend trying to catch this falling knife of GBP / USD 1.8125 with a STOP LOSS at 1.7900 and a TAKE PROFIT around 1.9000, but that will at least a couple of months away. Risk 225 pips to make 900. I may take profit or stop myself out before this trade hits either one of my designated targets, you will just have to keep checking our BLOG.

The other trades I have recommended that are currently live :
On 8/26/08 , I recommended to SHORT EUR / USD at 1.4740, currently trading at 1.4700, with a STOP LOSS at 1.4855 and TAKE PROFIT 1.4400. Again, this trade could be taken off before the designated targets.

On 6/25/08, I recommended to SHORT CHF / NOK at 4.9800, currently trading at 4.9000. That roughly 150 US pips in the money with 2 month of good swaps. This is a fundamental trade and basically an under the radar carry trade and will keep this on for a very long time.

UPDATED BLOG TRACK RECORD on CLOSED TRADES PIPS = 1124