I shorted the pair this morning at 132.94. My reasons were that the pair is weak and has been in a downtrend since October. On the three-hour chart, a hammer formed after a brief downtrend but the next candle closed near its low. This also hints at weakness. Finally, both price and RSI dropped below their recent uptrend lines. One problem is that there is an uptrend line from mid-December coming in at 132.61. If it can get below this then the next support is at 1.3234/27 and then the recent low of 1.3126. The 1.3234 is the low of last week’s significant hammer. If it doesn’t break the uptrend line, it will likely be a stop and reverse for me. It may spend another several months in last year’s broad range of 126.89 to 139.22 from last year. Here’s the three-hour chart:
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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.