GBPUSD and GBPJPY

If there has been a currency that comes close to being as reviled as the USD this is it, although it managed to pull ahead of the dollar for much of this month. Now it looks as though it might be faltering. I’ve been long and short this month in GBPUSD. Currently I’m short, holding two positions from 1.6555 and one from 1.6530. One is slightly in profit; one is slightly under water. The pair is in an overall downtrend since July on the daily chart. RSI is confirming this downtrend. In the light of so much divergence on the charts lately this is nice to see. It managed to climb above a downward sloping channel but this is something the cable has been known to do. It may return to and find support at the top of that channel. Or it may fall back into it. A short at these levels wasn’t particularly risky because I could set a tight stop.
What’s interesting to me about this chart is that RSI never dropped below 30 into the oversold level. Yesterday’s candle is bullish. Here’s the daily chart:

I’ve also been in and out of GBPJPY several times this month. This pair can be like Mr. Toad’s Wild Ride which means potentially big profits but also potentially big losses if you don’t choose your entry points carefully and trade with a tight stop.

On the daily it’s in a large range of 139.70 to 163.09. It may be forming a smaller range within this one with a top of 147.48 to 153.25. I bought at 148.99. Yesterday it was up as high as 151.75 so I took some profits and left a smaller part of the trade on. The profit stop is at 100 pips so I can’t lose now regardless of what happens.

On the three hour chart you see that I bought as it left the bottom of the interim channel. I was a bit late on that buy which meant my stop had to be below the bottom of the channel (151 pips). That’s too wide for many people but I had signals from shorter time frames that hinted at a rally. In addition, the potential was great with a top at 153.25. Finally, with the wider stop I cut my position size to a third of what it normally is. Needless to say, I watched it carefully after the buy to see if I needed to pull the plug.
That could be a flag on the chart. If so, potential profits are the length of the flagpole or near 155. Well that would be nice. Not likely, but nice.

Here’s the 3-hour chart:


Before I leave this pair, look at the RSI on the daily chart. As the pair dropped it bounced off the .382 fib retracement indicating a shallow retracement in momentum. Nice confirmation of a good buy. Remember, though, that I didn’t have that signal when I bought. Here’s the daily:

© 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.

USDCAD—Confused and unfocused

USDCAD is struggling a bit. Wednesday it reached a high of 1.0822. Yesterday I identified three logical support areas:


1) The EMA at 1.0748, close to the 50% retracement level from a minor swing of 1.0687 to 1.0822.

2) The near term up sloping trend line at 1.0682, attractive also because it was 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, attractive to me because it’s near a fib confluence area (the orange line on the chart at 1.0421)

After hesitating a few hours at the first level, it dropped to a low of 1.0656, slightly overshooting my second support. It’s lingering here, confused and unfocused. Look, if you were the USD with detractors that span the globe, you’d be a little confused and unfocused, too, after your “in their face” climb the past couple of weeks.

On the one-hour chart there’s a possible Head and Shoulders (H&S) pattern forming. It’s only a possibility—a potential right shoulder is only beginning to form. Even if this becomes a right shoulder, it still won’t be an H&S pattern until prices break through the neckline. When I say break I mean a close, not some namby-pamby let me dip my toes down there and see how I like the water foray. That would be around 1.0610. If you look at the chart you’ll see that’s where I have my stops, both on the trade that I bought at 1.0433 and the one I just bought at 1.0665. My trade from 1.0676 was taken out in yesterday’s correction at 1.0737.

Why did I add a position if I thought it might be an H&S forming? Because, as I wrote yesterday, I like that support level—it’s a minor polarity level (a level that has served as both support and resistance) and it’s an up sloping trend line. The H&S is only a possibility at this point. Momentum, as represented by RSI, never dropped into oversold (less than 30). As usual when I add a second position I take a smaller position size. Any loss will be comfortably absorbed by my gains to date. Buying at support I can have a tight stop.

To be honest there are things I don’t like on the hourly chart. The pair bumped its head on the 34 EMA and fell back, not just once but twice. I don’t like the rounded top on what could turn out to be head of the H&S. Pointy heads (upside down V) are better. They hint at an emotional reaction rather than a drying up of buying. Surely Banque du Canada isn’t intervening, propping up the exchange rate? The pair must regain and overtake its short-term trend line.

If the pair continues to drop I’ll still expect support at my third level around 1.0390/1.0421. Depending on what else is going on, that’s a buy point. If it does drop below 1.0600 it’s a possible short although there’s minor support in the 1.0500/50 level. 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.

EURUSD—back to its snuggie

EURUSD dropped to a low of 1.4683. It was only Tuesday that I wrote it would get back to the 1.46 area. How prescient of me, right? No. It was the chart, remember?

In any case, this is a comfortable zone for the Euro—a snuggie of sorts. Look back to mid-September and early October to see it. A look at the hourly chart this morning shows a V-bottom. This hints that the move was too far, too fast. That’s the reason for the quick bounce. Typically these types of bottoms are followed by a rebound into some sideways movement. Think about why this makes sense. There’s a quick sell-off. Then it reaches a low nobody quite expected and not only people who were waiting for a pullback come into the market but those who tend to buy bottom points and those who buy into a rising market. But the selling may not be quite finished.

If you look at the hourly chart you see this is the third V-bottom for the Euro. Sure enough, it’s stumbling as supply and demand works itself out. RSI also needs to climb above the 50% level to support rising prices. Had I been trading at the earlier low I would have bought but that’s the breaks. It now needs to show some oomph to convince me of a long at this level. Here’s the 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.

USDCAD—Resistance

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:

© 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.

A reader’s trade—USDCAD

A reader (and a big thank you to any readers I may have) sent me an email in which she expressed frustration with getting stopped out of trades. She attached a chart from this morning with the words, “I am attaching today’s CNDUSD mess.” I wrote her that I’d analyze it if I could post the analysis on my blog. She graciously agreed. Here’s her three minute chart showing the trade taken at 7:32 AM (EST) this morning. First, the right trade in hindsight is notoriously easy to spot. After all that’s what many so-called gurus do as they show you how to trade—use charts from the past. Unfortunately, we don’t get to trade with hindsight. But since I’ve been following the USDCAD so closely lately and posting my own trades hopefully everyone will bear with this after the fact analysis. Here’s the picture of her trade she sent me. She bought thinking it was a breakout and then was stopped out at 34 pips loss. One thing—this is a tight stop which is good. But tight stops only work if the entry is meticulously selected.

First, when trading any time frame you want to keep the longer ones in mind. Since she was trading the three minute chart, she’d want to keep looking at the 15- and 30-minute as well as the hourly chart. You want to be sure where you are within a broader price movement. Never ever take a trade based on one time frame only.

A look at the hourly chart shows a nice overall uptrend so her thoughts about going long were appropriate. But look at the candle just before the one where this trade was being contemplated. It shows a lower high. This is a hint the pair might be getting ready to catch its breath or perhaps even retreat. The prior two candles had upper wicks on them as well—another hint that higher prices were being rejected. This is what we get from charts—hints that allow us to put together possible scenarios of what’s unfolding. Here’s the hourly chart:

Returning to the three minute time one can see a range starting to develop. Not being in this trader’s mind, it’s difficult to know if she noted this. Since she was focused on going long it’s possible that she didn’t. This is a big issue—we know we want to go long based on one set of clues—there’s an uptrend, etc. As a result we tend not to let information in that might be contrary to what we’ve decided the pair might do. This isn’t just traders that do this (it's called confirmation bias) but it’s a financial hazard for traders. Whether she noted it or not, she waited until she saw what she perceived as a breakout candle and bought.

After a brief instant, the pair happily turned down, merrily blowing through her stop, and coming to rest in the 1.0695 area. Lingering there just long enough to grab a quick cup of coffee it turned up and climbed to a point where she would have had a 34 pip profit had the entire action not resulted in her being left as road kill on the trading highway along with who knows how many others. This is the kind of action that leads traders to believe the market has it in for them. It doesn’t.

What went wrong? As I’ve already explained we had some clues from the hourly chart. In addition, she was trying to trade a breakout. Breakouts can work but they often don’t, at least not on the first try. A quick rule for safely trading them is to wait until there’s a throw back to the point where they broke out. This wouldn’t have helped this trade but it would have reduced the loss somewhat.

Looking closer at the three-minute chart below we see a hangman candle right after the breakout candle. This is another hint that all isn’t rosy. This adds to the hints on the hourly and begins telling a story. The long red candle after the hangman forms a three candle evening star pattern which is bearish. The trade clearly isn’t as viable as one would hope. Should she have bailed out there? Perhaps. She had another chance to bail out when it broke and closed below the uptrend line. However she probably had this line in mind when she set her stop not far below that and tried to allow for some slippage.

Was there a better place she could have set her stop? The only logical places on this chart for a stop are just below the upward trend line, 1.0690 or 1.0650 which it tested twice over night. But the last one was 120 pips below her entry point. She might have found that steep.

So was there a better entry? Yes, I think so. By going back to the hourly chart she could have waited for a close above the breakout point and bought on that candle. Many traders set rules for breakouts—e.g. the pair should close n number of time periods or x percent of price above the breakout point. Or she could have bought when it began hesitating around 1.0710 and set her stop at the 1.0650. 60 pips isn’t a lot to risk in the volatile Forex spot market. Given the warning signals and given the fact that the pair had gained more than 100 pips overnight, the best thing might have been to wait.

But what if she had a job to get to and couldn't wait? Then the trade might have gotten away from her. Some, perhaps even many, do. That’s life. Believe me, there will always be another trade that meets whatever criteria you set for it. Those are the ones you need to wait for.

As for my two USDCAD trades that I wrote about this morning—one is up 375 pips and the other is up 162 as I write this at 4:52PM EST. I just lightened the first one by 20% to take that profit. It’s nice to see a little risk aversion—it’s good for the USD

Here’s the 3-minute chart I referred to above:

© 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.

AUDUSD—Nice pullback

My long AUDUSD from yesterday stopped at 10 pips above breakeven (about 3 seconds after I moved my stop up from just breakeven, LOL). I immediately reversed and went short. Why? I’d just blogged a few minutes before about the rounding top on the hourly chart. Rounding tops and bottoms stick in my mind because they indicate a slowing of buying or selling. The pair had touched and fallen away from the 62EMA. It’s not that the EMA had been containing price action. I didn’t like the way the curve down intersected at that point. I also had pointed out the negative divergence.

At the moment I was stopped and immediately shorted I wasn’t thinking about all those factors. My analytical self was no longer analyzing. The trader took over based on the information my analytical self had fed her from the prior analysis. Analysis builds on itself. During my weekend analysis I’d felt the pair was top-heavy and the ascent too steep. I was long because first, the pair was in an uptrend and second, there’d been a bit of a pullback. I thought I’d easily grab a hundred pips. But when I blogged about the hourly chart I no longer felt positive. Still, it wasn’t enough to close my long. I needed to be stopped out. I needed the market to show me I didn’t want to be long. Had my stop been below breakeven—that is, I’d taken a loss—would I have shorted just as quickly? Yes. That’s the purpose of the stop. So the market can tell you when your analysis is wrong.

On the three hour chart today one can see the EMA rounding off and heading down. Note that the pair is at a minor support. I’ll have to wait until the three-hour candle closes to see how it deals with that support. On the 15-minute timeframe it has bounced off it a bit. There are a lot of AUDUSD bulls so this pair probably won’t fall easily even if it’s getting ready to fall. One can ask the question. Why is the CAD, a commodity currency, falling? Why does AUD seem to be joining in on this fall? My honest answer? It doesn’t matter. I’m going to make money taking trades, not trying to answer what is probably unanswerable. 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.

USDCAD--on the move again?

Yesterday was uneventful for USDCAD but it's moving this morning. One of my original trades is still on, the one I placed at 1.0433. As of now, 5:40 AM EST it’s up 300 pips. To summarize, I’ve been going long this pair since October 15th when it dropped into the 1.01 range, a low I wrote that I liked very much. They have been profitable trades. Yesterday I added a second small position at 1.0647. This replaces the trade that hit its profit target at 1.0655 (219 pips). I just moved the stop to breakeven.

Let’s look at the overall situation here. It is in an overall downtrend. Let’s not forget, too, that the loonie is a commodity currency and commodity prices seem to be forever going up. Finally, there are those turning blue while holding their breath waiting for the USD to collapse in on itself. Oh yeah and the “let’s stop the USD as a reserve currency” crowd. Do I have to say their names? With all this is it still worth being long in this pair? Or should I grab my profits, close my longs, and run?

The answer is in the charts. On the daily chart momentum, as measured by RSI, is finally above the 50% level. The next important level in RSI is the 61% level (interesting it’s a fib number). In addition, the pair made it past a crucial barrier that I had calculated (this is the orange line on the chart). One can see the pair is attempting to push through resistance. Another thing that’s interesting on the daily chart is the V-shaped bottom the pair made. This might indicate an emotional reaction so I’m not thrilled with this—I’d have preferred to see a more rounded bottom which would tell me selling was drying up. But we take what we get. In the face of the very significant intermediate downtrend (that’s Dow Theory use of the term intermediate) this small upturn is insignificant so the buyer needs to be cautious. Here's the daily:

After a pause on the hourly chart, the pair has formed some bullish candles. What I don’t like is the divergence between RSI and price. But the bottom line for me is that I’m up 300 pips in one trade (as of 5:40AM EST) and the other is set at breakeven. So I’m staying in. Another minor resistance level is coming up at 1.0791 (60 pips away). If things look good then I may add another miniscule position. If not, I won’t. 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.

EURUSD—Another EW look

Thought I’d take another look at the EURUSD daily chart from an Elliott Wave (EW) perspective. Not much has changed from last week. The Euro has dropped slightly (currently 1.4857 as of 9:43AM EST). On the daily chart, we see what could be an ending diagonal. Dum-de-dum-dum, if it is but let’s remember that the pair is still in an overall uptrend and something definitive must happen before locking in on any conclusions. If it drops to the 1.46 area, it could be a good buy depending on what else is going on. It will never get back to 1.46, you say? Oh sure it will, darling. It’s the nature of the beast. Here’s the daily chart:
On the 3-hour chart, it has dropped out of a triangle and may be heading down to an uptrend line. The little square box is a sell order I have in place. Momentum in general has fallen off a bit. This needs to pick up again. It’s a “wait and see” on this pair. Here’s the 3-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.

AUDUSD—Breather or beginning of a reversal?

One of the biggest challenges a technical trader faces is determining when a trend is changing. Reams have been written on how to detect this change. Often these attempts are unsuccessful. It’s easy to understand why this is true when there’s no clear understanding on why prices trend in the first place. Yes, there’s an interaction of supply and demand; yes, there’s a coming together of buyer and seller in the transaction, often for a variety of reasons. But the factors are many and not easily understood. If the cause isn’t understood it stands to reason that the solution—knowing when one trend is ending and a new one beginning—is not easily understood either.

This is why I ignore those who insist the end of a trend is near. For example, look at how many are saying the S&P is ready to reverse and have lost money shorting it in the last few months. It may be ready to reverse. But that doesn’t mean much for the trader who keeps shorting it and then watches as it continues up.

One hint of a possible trend reversal is when a pair breaks a major trend line. Gann wrote that a hint was when the asset broke old or new tops especially after having had a long run in any given direction. Divergence is another clue to a potential trend change. The challenge for us as traders is to be aware of these hints but to only act on the preponderance of evidence.

For AUDUSD the trend since March has been up. It has been a steady money maker for those who bought. It has also made money for those who have traded short term reactions. As usual, though, the real money in a strongly trending pair is made by going with the trend.

On the hourly chart below you see the long term daily uptrend line and the pair is far above it. (If by some chance it reaches that trend line it would be a buy, depending on what else is going on in the chart.) It broke an hourly uptrend line. There’s a hint, correct? There’s also negative divergence (non-confirmation of the trend) with RSI. Another hint. But non-confirmation is all over the place on the charts and while this is technically troubling, one shouldn’t be trading it by itself.

More significant to me is the rounding top that has formed. This indicates buying is slowing. That’s s-l-o-w-i-n-g, not stopping. It could be profit taking or it could be uncertainly. Regardless, it’s an observation.

For the last several hours it has been in an uptrend at the same time there is negative divergence on the RSI. But the pair has done this before recently. It dropped to a level it hasn’t been at since October 19th. So, given the overall uptrend with no signs it has been clearly broken and given that I could set a tight stop. I bought. I’ve moved my stop to breakeven.

Now we have to watch and see what the pair does next. If it comes to the rounding top I may look at it as a potential short because I can set a tight stop. 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.

USDCAD--Poked above resistance

Well, well. Not only did USDCAD poke its head above resistance but it shot up to 1.0697 taking out one of my trades at 1.0655 for a profit of 219 pips. The other trade is still on as I have the profit target set quite a bit higher, wondering if it can make it up through its old range of 1.0592 to 1.1125.

Why did I put a profit target at 1.0655? Many times pairs will poke above resistance only to fall back down. I knew I was going to be away most of today at meetings and I decided to grab the pips should it get up there. But why not target 1.0600? It could have been. One reason is I don’t normally set targets at round numbers. Also, if you study the range from this past summer you find 1.0685 is a minor resistance area. Had I been around I might have moved the stop in closer and also moved the profit target. But this is Monday-morning quarterbacking. The trade still on is solidly profitable; the one that just went out earned over 200 pips. Why quibble?

The USD isn’t out of the woods yet, what with all the dollar bears out there and those fearful that the currency is on its last legs. But for now it’s doing alright. Now we need to see if its little breakout fails. If it does, I’ll decide what to do then. One thing I do know is that the old truism is true—those that don’t know what’s going to happen are the ones talking; those that know aren’t talking. And it’s really doubtful anyone knows.
© 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.

USDCAD—Same old, same old?

My USDCAD trade is up 150 pips as I write this at 8:25AM EST. (I actually have two trades on, one at 1.0333 and 1.0336.) I've been here before.

If you look back in this blog, you see I’ve been trading this pair since October 15. At first it looked as though I was just buying low and hoping for the best. Not me. I don’t take hope trades. I buy because of evidence and then I wait to see what happens. Last week I took some profits at 200 pips. It then rose close to 300 pips and fell heavily, stopping out my remaining position at 100 pips on Thursday. At that point I went long again with two trades and explained why in the blog that day.

Is this just the same old, same old? Is it going to drop back yet again? Its high last week was 1.0583. It just now touched 1.0590. If you look at the daily chart below, you can see the pair was in a summertime range of 1.0592 to 1.1125. So it’s not unexpected that it will falter as it approaches that range. That’s resistance.

Can it make it above there? Yes, if the traders bullish on this pair can prevail over those who are bearish. For those traders to prevail, the pair needs the breakout buyers that might buy if it pokes its pointy little head into the range. This would help the pair gain momentum. Once safely and decisively in the range the next serious resistance will be at the top of the range at 1.1125. Which would be a very sweet trade, right? Hah! Fat chance, the bears say.

Is it a good short at 1.0583/92? One could make a case for it generally. Since I’m long and in profit (I’m getting ready to move my stops again), I will not do short unless lower time frame charts are compelling. 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.