The market is largely in the doldrums ahead of NFP today. As though that will make a big difference but everybody seems to be a tad nervous over what to do next so it’s as good an excuse as any..
GBPCHF is a pair I trade on and off and yesterday it looked as though it was ready to drift upwards again so I went long at 1.6568. The trade is up 80 pips this morning and I took partial profits. It looks as though it may be moving back to resistance at 1.6690 where it may prove to be another short. Depending on how you calculate your Fib levels (and I don’t always run mine off the extreme highs and lows), the 1.67 area is also .382 retracement from the November highs. This level is also polarity (it has served as prior support and resistance). If it does close above it, after the brouhaha that may take place around NFP, additional resistance is at 1.6785, 1.6990, and 1.7103. Support lies at 1.6530 and 1.6468.
Much will depend on price and RSI behavior as to whether it proves to be a good short. When I say price, I mean to look at such things as candle behavior. For example, if the candles start displaying upper shadows and small bodies, it can be a clue that the market is rejecting higher prices. This isn’t always true but at resistance, one can be a bit more confident. With RSI, it’s interesting to watch if the indicator moves into an overbought condition and is dropping out of that or if it fails to achieve 62.2 (the high prior to this).
You need to exercise great caution when trading around major news events such as NFP. I normally avoid trading because the markets can be volatile for no good reason. 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.