Two major concerns for the markets have persisted this year… the U.S. – China trade talks and Brexit. As the deadline approaches ever nearer this month for Britain, there remains little progress toward an amicable solution with the E.U. On days of optimism, the GBPUSD rises and on days of pessimism the GBPUSD declines.
Today after the first hour of trading in London, the optimism was not there. A short was taken risking 20 pips for a potential 62 pips to our daily target at 1.2200. Price at first pulled back against us, but then moved lower. In the hour before the U.S. open, the pair found some buyers causing our profit stop to be hit, before price moved down to our daily target.
As the U.S. session got underway, the sentiment of the markets was one of “risk off”. This made the USDJPY look like a nice short opportunity. With further threats coming from the White directed at China, the trade looked like it might be a good one until a headline suggesting that China was sending a large delegation to Washington implied they were not offended and hope resurfaced for favourable trade talks once again, which caused the USDJPY to stop and reverse hitting my 20 pip loss.
This is the currently reality of trading in this market. It’s not the economic news releases which we can trade around that will hurt us – it’s the headlines popping up and uncertainty around the two issues that have weighed on the markets all year. The markets are very volatile and many large asset managers are sitting on the sidelines currently in cash until more is known.
I am being extremely cautious, keeping positions smaller than usual, with reasonably tight stops and locking in profits quickly… before an unforeseen headline can evaporate them.
Good luck with your trading!
