Cable was expected to open with a gap today and has, after PM May interviewed with Sky news today (Sunday). The normal play is to trade the filling of the gap, so a purchase of pound against dollar, stop several pips below the open and due to the small size of the gap, it has to be for a 1:1 risk reward of about 15-20 pips risk for 15-20 pips profit, factoring in also a slightly wider spread due to thinner liquidity at these hours. Quite tight to do, but one has to trade what one sees, and the pattern of gaps filling is not generally one to trade against. If it does not fill overnight, it will probably fill some time next week, so a good target level to reach for any buy trades this week (1.2272 or so) if the market does trade lower and take out stops over night.

I have actually gone for a more ambitious play having seen that the gap only exists on lower timeframes like the M30, M5 and M1. I have actually gone for a 25 pip stop and a take profit of 115 pips, a play I will take again later if it doesn’t work out. Second or third time lucky is fine with such a high risk to reward.

Coming soon... signals every day. Pepperstone Group Limited

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