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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Trading the Trend: short GBP/USD

Renewed weakness in GBP/USD means the downtrend of the past few months appears to be reasserting itself. Our trade is to go short GBP/USD, with a stop at $1.2340 and an initial target of $1.1960 and then the March low of $1.1830.

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(Video Transcript)

Long copper not too shiny

Hello, welcome to Trading the Trend for Wednesday 25 October 2023. This week we're going to look at doing a short pound against the dollar on renewed pound weakness, but we'll look back first at last week's Trading the Trend.

For this one, we were going long copper down at about 8035, so roughly where we were a week ago, to be honest with you. But it looks like there are signs of strength emerging here. We had two big up days at the beginning of this week, which restored things.

The stock hasn't been hit down at 78.48, so that's good. But you can see crucially that this was a big area of support since November of last year. So it makes sense to expect maybe a repeat performance of what we had before with support holding and the price making fairly significant gains.

So the trade was to go long with a target at 8500. We haven't admittedly moved very far in that direction, but it looks like, with the gains of the previous two days so far this week, the buyers appear to be in control once again.

Short GBP/USD shows promise

Looking to this week for Wednesday 25 October, we are going to go short pound against the dollar. Crucially, this one has seen a big change in trend recently. You've seen this huge pullback from July from the highs to these lows in such a very short space of time.

But the consolidation we've had in October really appears to be working out the downside. You had a big rebound at the beginning of the month that then faltered. It tried to break trendline resistance yesterday on 24 October, and now the sellers appear to be driving this one down once more.

So I think we're going to look at going short this one with really a target down towards 119.60 in the first instance. Now, for the stop, we have to look at where the trade idea might be invalidated.

Stop above mid-October highs

So we're going to put it back above trendline resistance from those two low highs. So about 123.40 really is where we're going to put our stop. So it's above these mid-October highs as well.

So I think what we're expecting is it to move back down towards 119.60 and then beat over the course of time down towards the early March lows of 118.30, which is giving us a better risk to reward ratio.

So that's turning the trend for Wednesday 25 October. We're going short the pound against the dollar, short GBP/USD with a target down towards 119.60 and then 118.30 with our stop at 123.40.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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