2Bull Forex Blog

We gave a live short trade in the British Pound and it’s piled up big profits and our entry point was spot on (see previous articles) and we have banked a great profit but where will the pound go next?

Let’s take a look.

The British Pound set up was such a low risk high reward trade due the fact it was so overbought - a record extreme to the long side in the Net Traders Positions warned of the break and monthly multi year resistance was unlikely to be penetrated without a shakeout.

Were no self proclaimed experts and we could have been wrong - but common sense said the odds favoured the bears:

A record long position held by specs, and prices approaching multi year resistance and waning price momentum?

The break has of course occurred but where is the currency going next?

The Washout

The washout of spec longs is now taking place and it looks like the pound may have further to go on the downside.

We covered our shorts on Friday, with a tidy profit however our initial target of the mid Bollinger band has been met and were looking at re entering the long side.

The Longer Term Trend is Up

The longer term trend is up and once the speculators have taken their medicine, it will be time to look at the long side again.

Areas to watch are the lower Bollinger Band and the 1.9600 level.

At the moment there no indication to buy and you need to watch Price momentum

As with the short trade we did we will keep an eye on the stochastic and Relative Strength Index (RSI) these are great indicators and any trader should use them.

Look for a turn up in price Momentum above support to get back in on the longer term up trend.

As with the short trade we gave you WAIT for confirmation – DON’T assume anything get the signals first.

One lesson any trader should learn is NEVER try and predict we keep restating this as most traders can’t resist predicting – but if you do, you are relying on hope and will lose.

Trade the reality of price and you’re trading the truth and the odds and that’s the best you can do – but as you can see from our last trade that doesn’t stop you making a lot of money!