Most of the US financial markets are closed today as a result of the impending intrusion of Hurricane Sandy on New York City. However, the Forex markets remain open and investors chose this morning to remove positions off the table as they await the aftermath of the hurricane. One such trade is GBPUSD where we have seen investors and traders exit their long British Pound positions and returned to their defensive USD Dollar positions.
GBPUSD is in a short term downtrend in the short term (over the past month), becoming oversold around September 21st in the 1.63 vicinity. From there it continued to make lower highs and lower lows. Considering the hurricane and the direction of the FX Cross, a short for GBPUSD at market seemed viable. I risked 0.54% for an initial decline of 0.16% and a medium term decline of a little over 1%. With my initial price decline target reach, I'm patiently awaiting my medium term decline. Expectations are for GBPUSD to break through the 50 DMA and to find support around the 1.59 price level. Medium term GBPUSD is range-bound between 1.66 and 1.522. Please see the Daily chart of GBPUSD below.