As GBP/USD breaks 1.6400 so what's left in the pound trade now? via ForexLive

The problem with trading events with an expiring timeframe is that getting in at the right time becomes a very tricky issue. Sometimes you want to wait for better levels but then you risk missing out.

As we touch a new high at 1.6409 we're potentially entering dangerous territory for those not in the “No” trade but are wanting to have a go.

The other issue is that making a move now risks you getting stuck in right near the top and leaves you a very large loss from a “Yes” vote. I can see that we could well get swings of around 50-100+ pips as each result or exit poll comes out, so you can't even keep a tight stop on a long or short position up here.

If I'm honest I'm very unlikely to enter anything new in the pound right now so I'll be looking for what transpires after the results and what opportunities may present themselves. I'd advise any less experienced traders not in trades to stay out until the dust settles as all you are doing is taking a gamble. If gambling is your game then go to the bookies and have a fixed stake bet.

What is the big money thinking?

It's been big money that has been reacting to every stage, poll and risk event that's happened over Scotland and they are in the driving seat. I've said it countless times that there's more worries offshore than onshore, and we saw that with Yellen comments yesterday and the SNB's today.

Will the big money that has supposedly been flooding out suddenly come rushing back in after a “no” result? That's tough to judge as there's been a bit more to the fall from 1.71 than just Scotland. Weaker data, unwinding of interest rate bullishness and a strong dollar are just a few of the reasons for the fall.

On the charts you can see the defining area where the Scottish trade took over and that's around the 1.66 level.

GBP/USD Daily chart 18 09 2014

This is a big reason why I'm looking at the area to act as strong resistance if we pop that high. Apart from looking strong technically, if it is the area that big money got in at to push it down, it will likely be the level they will all finish at to get out. It will also be the level that shorts from the 1.71 highs will be looking at as a reassessment point and a level they'll want to protect. If it breaks then we can expect some sizeable short covering to start coming in.

As I type we are seeing the pound fall to 1.6350 after breaking 1.6400 and we're going to be seeing plenty of this. We could have seen some extra fix action going on behind the rise through 1.64 but this is going to be just the start of what's to come over the next few hours. On the brightside at least Eamonn will have something to watch tonight

So once again, stay nimble if you're in sterling trades tonight, and be prepared for some wild moves.

posted via ForexLive