Long GBPUSD - Anticipating a Good but not Great Data
We have USD PPI data coming up soon and I've been trying to decipher how the market may have anticipated this. Retail sentiment is Net Long of USD so my base expectation is unless its a better-than-expected number we shouldn't see too much of a jump in USD. Historically a beat is ~45% chances, going back to 2007 data.
Now to position myself to the trade, there is a bit difficulty as I want to look the most extreme divergence to profit, GBPUSD looks particularly oversold (thanks to the mixed data releases this afternoon). On the risk management standpoint, I am still down on paper for my GBP long so I do not want to add too much GBP exposure here.
I'm in 1.3276. SL is 1.323 and I expect this to move somewhat against me if the data is good or significantly in my favor if its a miss or just on target. CPI is the more important figure to watch and its for tomorrow.
Now to position myself to the trade, there is a bit difficulty as I want to look the most extreme divergence to profit, GBPUSD looks particularly oversold (thanks to the mixed data releases this afternoon). On the risk management standpoint, I am still down on paper for my GBP long so I do not want to add too much GBP exposure here.
I'm in 1.3276. SL is 1.323 and I expect this to move somewhat against me if the data is good or significantly in my favor if its a miss or just on target. CPI is the more important figure to watch and its for tomorrow.
Note
I was completely wrong on the outcome analysis. The market went in my favor as the worse than expected data came out and took me out.There are a few lessons that I learn:
1) The market seems to have anticipated a bad data like I did. This explained why it pops only to crash back thanks to traders taking profit off. There was mismatch in my retail positioning and actual price sentiment at the time. I was really hesitated and only put the trade on around 20mins before announcement.
2) Secondly is the next new for USD is just too good. My current thesis is that as soon as the PPI number was out, market immediately looks toward to CPI (expected good) and totally ignore the worse than expected release (compound with point 1, it explains mostly why the USD's consistent strength.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.