(Partial video transcript)
This week’s trading opportunity
Hello and welcome to this week’s “Trade of the week”, which is to go short EUR/GBP. If you look at my chart in the video at 0:20, the reason is technical because, basically, we are getting close to some important resistance area. And you can see that the highs going back to, I believe it was, July of last year, and also the highs all the way back to November 2023 are very close to where we’re trading at the moment.
Plus we’ve got these lows going back to November of last year, and they together with the high here on the 18th December are very likely, in my opinion, to cap the upside. Plus what we’ve seen is a bounce back, which could be an ABC zigzag correction. Therefore, I wouldn’t be surprised if the previous downtrend were to resume in the coming weeks. And that’s the technical reason why I would like to go short EUR/GBP.
Previous week’s trading outcome
But, let’s look at the “Trade of the week” from last week because, unfortunately, once again we did get stopped out. I had a really bad start to the year. Out of the last five trades, four of those didn’t work out. Two were minimally stopped out before the market turned, but they were still stopped out, and one, basically, ended up at break even.
So, we’re now actually down 5.65% since the beginning of the year, which is really not great. I should have just gone along the FTSE 100, but hindsight is a lovely thing to have. And the reason is that, basically even, though we’re down, we’re not down, you know, 10 or 20%. It’s because we’re risking 2% of capital. So we will keep on doing that because all we then need is one or two good trades to make up that loss again.
Going back to last week’s “Trade of the week”, you can see here West Texas Intermediate (WTI), and I went short on a bounce back to this halfway point of this previous bearish candle. We got in on that trade and then the oil price dropped by about $1.50. But it held at this previous support here, and then we had the heightened tensions in the Middle East.
Once again, President Trump putting a spanner in the works. And here this 4.3% rise on Wednesday of last week didn’t stop us out, but the next day’s 2.3% rise did take us above our stop-loss, which was at the end of January high here. So we got stopped out on that trade there.
This week’s trade in summary
Coming back to this week’s “Trade of the week”, it is to go short EUR/GBP at around current levels at £0.8745 with a stop above £0.8800 and a downside target in the £0.8655 area.