Intraday Market Thoughts

Moody's UK Downgrade Helped our Strategy

by Ashraf Laidi
Feb 23, 2013 12:38

Moody's downgraded the UK's govt credit rating to Aa1 from AAA after the US closing bell on Friday, sending GBPUSD to 1.5130 from as high as 1.5320s. Moody's said sluggish UK growth likely to extend to H2.Despite identifying a doji candle in GBPUSD in Thursday's candle, we used the formation to anticipate a rebound from 1.5220s to 1.5320s on the following day before selling again. Both cable shorts from Thursday were filled at 1.5300-1.5350 on Friday, and hit their final targets at 1.5190 & 1.5150. Here is the rationale used for Thursday's Premium Insights on GBPUSD “The downtrend remains intact despite the bullish turns in the short-term (daily) shown in terms of the daily doji candle and their stabilizing stochastics. Weeklies are also appearing stable but we should not let that overshadow the deteriorating bearishness on the monthlies. This has been the prevailing theme in the last 3 Premium editions. Instead of issuing a dual trade of going long and followed by shorts, we will issue 2 shorts placed higher from current levels. Capping the bounce near 1.5280-1.5320 remains the strategy for the next 7-10 days”.  Both USDCAD trades hit their final targets and two more were open on Friday. The short in EURUSD awaits final target at 1.3140. See latest Premium Insights for the charts & latest trades.


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