The answer is unclear. One thing I keep mentioning in the blog is that usually pairs don’t suddenly plummet down from a top. Topping and bottoming is a process that takes place over many hours and even days and weeks. During that period, the action can be whippy. If you look at the three-hour chart you see indecision in the form of the candles—they’re small or have significant upper and lower shadows, interspersed with some longer ones.
What hasn’t changed is that the pair is exhibiting weakness. It certainly isn’t in the robust climb that it has exhibited through much of the spring, summer, and fall. However, while the pair is heading for the bottom of the range after a day of hovering about in the upper third of the range, there’s support here that may hold. As of now, I’ve lightened my short at +20 pips and have moved the stop to breakeven. I’m winding down for the week so I may not get to do much more with any pair before Monday. If the pair should make it down to the trend line at .9050, it would be an interesting place to assess buying. A break above .9200 would hint at returning strength.
Remember, liquidity is shrinking as we approach the holidays. This can result in exaggerated moves that don’t make a lot of sense. Here’s the three-hour 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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