© 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.
When the RSI broke the trend line, what does it mean?
ReplyDeleteWard,
ReplyDeleteYou can draw trend lines for indicators as well as for price. When an indicator is headed up and then violates its trend line, it's an alert that should cause the trader to pay closer attention to price. If price then also violates its trend line, it's a good clue that price may be ready to decline. I posted this chart on Monday, Dec. 7 and since then, AUDUSD dropped to .9015 from a high of .9188. This is only 173 pips but you could have had a nice short trade. Remember, though, this was a weekly chart. This behavior of price and RSI hint at weakness on a serious time frame. We'll have to see how it plays out.
I don't trade based on only one thing. Technical analysis means you rely on several clues such that you have a higher probability of making a good trade.
Thanks for your comment.
Dianne