Post FOMC Trader Results – Gbp/Usd – 23rd Sep 09

POSTED BY Seeni on Sep 24 under Fundamental Analysis, Trade Results

We had FOMC Statement and Feds Funds Rate decision both released yesterday. We all know pretty much for sure that interest rates are going to stay as it is, with it already being near zero.

What was more interesting was what Bernie and Co. had to say about how the economy was doing and what their overall plans were. As usual, they had their bullish, “oh the world is getting better and everything is rosy and sunny under Obama’s administration” tone to their speeches.

As such, the market greatly took to this speech and had some immediate USD strength. Further to that slight accumulated strength, the asian session was quiet today before USD strength returned again during UK trading hours today.

Post news trade

The market was a-typical in its knee jerk reaction to such largely anticipated news releases. This is what happened;

I was specifically watching the Gbp/Usd pair as i had pre-determined that this is the pair i was going to trade because;
a) Gbp was heavily overbought(much like the rest of the majors)
and
b) I had a long term trade setup bias as posted here

So, here is what happened;

1) Market went down a couple of pips
2) Completely spiked upwards(Usd weakness) for a good 40-60 pips within the first 5 minutes

At this point, most traders will be jumping in to go long as they think that this is the direction the market is heading towards, with such a large movement in such a short time.

However, we have already seen extreme USD weakness and these comments from Bernie & Co,
“…economic activity has picked up following its severe downturn. Conditions in financial markets have improved further, and activity in the housing sector has increased.”, made me feel that USD strength might return.

So, right at the top of the spike, we waited to see the buying of cable stalling and a decent retracement followed.

I sold at this point, getting filled at 1.6442

Sold at the top of the spike retracement at 1.6442

After moving in a hard stop loss, the order was left to trade by its plan and this was the state of the order just a few hours earlier.

Profit of over 300 pips the next day

The trade finally lost momentum and found support at 1.6000 level, which is also a very strong psych level. I therefore quit the trade for 371 pips profit overall.