Well it looks like we didn’t have to wait very long for that possible GBP/USD H&S pattern to trigger a short sale. (See below) We are short this pair and looking for a major push down in the next day or two. Our stop is placed just above 1.66 (above the top of the right hand shoulder) and we’ll be trailing the stop. Check back in to see the progress of this trade.
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A lot of times, especially during the summer slow months, there isn’t enough fundamental news to drive the markets and it’s times like these when the technicals can really take over. Just doing a quick perusal of some charts, I came across this: a possible head and shoulders pattern in GBP/USD. Have a look:
As you can see, this pattern isn’t “perfect”. Yet it’s close enough to merit some observation in my book. I’m going to keep an eye on this pair and will be shorting the breakdown around 1.635 should the pattern complete. Stay tuned!
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Many times, newer traders ask me how they can find out how much a “pip” is worth for any pair. Some will refer to these as pip “costs”, others will say pip “values”, etc. but it’s all the same thing.
They all want to know, if my pair moves up one increment or down one increment…how many dollars does that equate to?
Here’s the simple answer. It’s automatically calculated for you on your trading station. You can view this on the “Advanced rates” which is the default setting..OR…you can view it on the Simple rates” tab.
See both of them below.
I’ve circled (in each format) where to find the pip cost/value for a pair. Notice that any pair that ends in USD (ex. EUR/USD, GBP/USD, NZD/USD, etc.) all have pip values of $1.00 per standard mini lot. Had this been a micro account, then the pip value would be 10 times less or .10 (10 cents) per pip of movement (since a micro lot is ten times smaller than a standard mini lot).
Remember, that a standard mini lot = 10,000 units of currency and a micro lot = 1,000 units of currency.
So the pairs that end in something other than USD (ex. EUR/CHF, USD/JPY, EUR/AUD, etc.) will have pip values that change slightly over long periods of time.
However, you can easily see what a “pip” is worth in that pair BEFORE you place your trade since it’s conveniently located on your quote screen.
This is important to note because there’s a big difference in EUR/GBP’s pip value of $1.66 and EUR/AUD’s pip value of .84 (84 cents).
So one pip of movement for or against you in EUR/GBP is +/-$1.66. However, in EUR/AUD this same amount of movement is +/-$0.84 (big difference, dollar wise…yet the same amount of pips moved). Click on the charts to enlarge them.
Sean Hyman
P.S. - Want to learn more about fundamentals and technicals? Sign up for an inexpensive, only forex course today and we’ll show you how: http://www.mywealth.com/currency-trading.php
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