Ralph Shell's  Instablog

Our inclination to scalp the pair from the long side yesterday was the right approach but you had to move quickly. The break which took the market down a little under 1.62 found some buyers.  Open interest at the CME went down 3789 contracts, meaning that short covered while the longs bailed out. The GDP in the UK was down 0.7% in the second quarter, a little better than the 1.0% down in the US. The Michigan survey this morning revealed that consumer confidence in the US is waning.  We are currently trading at 1.6310, after yesterdays run up in the high 1.63s.

  

Since the brief trade above 1.70, this market has been on the defensive and has a period of lower swing highs and swing lows.  While we prefer to not have a trade on over the weekend, but shorting this pair above 1.6350 looks intriguing.  The euro versus the pound has also made a nice run this week.

It looks like the easy money may be out of this one after the 300+ pip run up.  Best to step to the side lines and look to re-enter  the long side on a sell off to the 87 level.