Ever heard the expression “buy the dip – sell the rally”? Selling the rally or “retracement” (or pullback) in a downtrend does make sense. After all, no market ever moves in a straight line and a pullback gives us a slightly more efficient entry compared to if we just sold the spike.
The past few days we have seen EurUsd, GbpUsd and AudUsd all pullback. Yes, the market breathed in (and retraced) before it could breathe out again and make a lower low.
GBPUSD yesterday closed as an inside seller bar – rejecting the previously tested dynamic level of resistance – the 20ema. Inside bars signal indecision. Could the break of yesterday’s low be the confirmation for further downside movement?
GBPUSD Daily Chart
Certainly, many traders will use this as their signal so they too can either add to an existing long-term Cable sell or to create a new position. They will typically place their sell order below the low of Wednesday’s inside sell bar (minus spread, minus a pip) and place their stop above the high (plus spread).
We would rather see a “ringed high” set-up to entry this trade – however, we recognise yesterday’s inside “sell bar” as a valid entry to enter this fast-moving, down-trending market.
Remember, anything in the market can happen at any time – and there are no guarantees.
Any opinions expressed by our company’s representatives regarding the prices of specific currencies and the direction they will take in the future are purely opinions and are used for demonstration or training purposed only. They do not necessarily represent the opinion of Thelazytrader.com are NOT guaranteed in any way. In no event shall Thelazytrader.com have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided verbally or via the Internet, or any delays, inaccuracies, errors in, or omissions of information.
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of US jobs report
EUR/USD stays in a consolidation phase above 1.0700 after closing the previous two days in positive territory. Investors eagerly await April jobs report from the US, which will include Nonfarm Payrolls and Unemployment Rate readings.
GBP/USD advances to 1.2550, all eyes on US NFP data
The GBP/USD pair trades on a stronger note around 1.2550 amid the softer US Dollar on Friday. Market participants refrain from taking large positions as focus shifts to April Nonfarm Payrolls and ISM Services PMI data from the US.
Gold remains stuck near $2,300 ahead of US NFP
Gold price struggles to gain any meaningful traction and trades in a tight channel near $2,300. The Fed’s less hawkish outlook drags the USD to a multi-week low and lends support to XAU/USD ahead of the key US NFP data.
XRP edges up after week-long decline as Ripple files letter in reply to SEC’s motion
Ripple filed a letter to the court to support its April 22 motion to strike new expert materials. The legal clash concerns whether SEC accountant Andrea Fox's testimony should be treated as a summary or expert witness.
US NFP Forecast: Nonfarm Payrolls gains expected to cool in April
The NFP report is expected to show that the US economy added 243,000 jobs last month, sharply lower than the 303,000 job creation seen in March. The Unemployment Rate is set to stay unchanged at 3.8% in the same period.