Yesterday I wrote USDCAD would meet minor resistance at 1.0791. It has. After a high last night of 1.0822 it’s dropping, reaching as low as 1.0760 so far this morning as of 4:00 AM EST. Is the ride over? Is USD on its way back to purgatory? Or is this a simple correction to gather energy before the next climb?
Clues to an answer lie in discovering the logical correction levels. A drop below these levels might indicate a more serious reversal. Looking at the hourly chart there are three logical levels:
1) The EMA at 1.0748. This is also close to the 50% retracement level from the recent minor swing low at 1.0687 to the high this morning of 1.0822.
2) The near term up sloping trend line at 1.0682. This is attractive because it’s a minor polarity level. Polarity means a level that has served as both support and resistance.
3) The longer term up sloping trend line in the 1.0390 area. This is attractive to me because it’s near a fib confluence area (the orange line on the chart near 1.0421)
The hourly candle that closed at 4 AM is bearish. There’s also negative divergence but that seems to be a recurring theme these days.
Of the two positions I have open, they’re currently up 337 and 123 pips. The smaller one is the 123 pip one and will be taken out if it retreats much below the EMA. I lightened up a bit yesterday on the bigger position. There’s nothing left to do but let it ride. Here’s the hourly chart:
Clues to an answer lie in discovering the logical correction levels. A drop below these levels might indicate a more serious reversal. Looking at the hourly chart there are three logical levels:
1) The EMA at 1.0748. This is also close to the 50% retracement level from the recent minor swing low at 1.0687 to the high this morning of 1.0822.
2) The near term up sloping trend line at 1.0682. This is attractive because it’s a minor polarity level. Polarity means a level that has served as both support and resistance.
3) The longer term up sloping trend line in the 1.0390 area. This is attractive to me because it’s near a fib confluence area (the orange line on the chart near 1.0421)
The hourly candle that closed at 4 AM is bearish. There’s also negative divergence but that seems to be a recurring theme these days.
Of the two positions I have open, they’re currently up 337 and 123 pips. The smaller one is the 123 pip one and will be taken out if it retreats much below the EMA. I lightened up a bit yesterday on the bigger position. There’s nothing left to do but let it ride. Here’s the hourly chart:
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.
My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.
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