A look at the daily chart shows the pair is still trending upward in a bullish channel. RSI is staying in bullish levels, not dropping below 49.77 during the recent correction. This morning the USD weakened as well so commodity prices are rising which is, of course, good for this commodity currency.
On the weekly chart, the pair closed at .9147. This was below last week’s close of .9330 and the prior week’s close of .9191. This suggests the pair is either consolidating or in a congestion area.
Note that there’s divergence between price and RSI since mid-October on the daily chart. Divergence is often a sign of weakness but it can go on a long time before price reverses. It’s not tradable by itself if other clues for a potential trend reversal are not present. Friday’s candle wasn’t quite a hammer since its body was greater than 10% of its length but it had a longish, lower shadow that hinted the pair was rejecting lower prices. I’ll need to study a lower timeframe to get clues about possible reversals. Here’s the daily 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.
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