Tuesday, January 19, 2010

GBPJPY—working its way back up inside the triangle

The pound in general is doing well this morning, ostensibly because UK CPI exceeded expectations but the writers and pundits have to write something, right? My remaining short in this pair was profit stopped overnight at 1.4904 for +80 pips.

GBPJPY is still within the triangle I’ve been blogging about lately, somewhere in the middle so this is no place to take a position for most traders. I did however just get off another short at 148.71. It’s a small position because I’m not entirely comfortable with this. However, my reasons for shorting again are as follows:

1)The pair is in an overall downtrend
2)Price objective from the confirmed double top is still unmet
3)The yen is strengthening across the board
4)Within the current triangle on the one-hour chart, the pair is running into resistance. The last two closed candles show long upper shadows that hint higher prices are being rejected
5)The most recent closed candle on the one-hour chart is a spinning top.

Spinning top candles have small bodies, black or white. They show the bulls and bears are in a tug of war. Even though the prior candle was a long white bullish one, the bulls haven’t entirely seized control. Some would say that these last two candles are a double top but that’s not true unless price breaks below the trough (the lowest point between the two).

Let’s just see what happens. Here’s the three-hour chart:

© Dianne Fecteau, 2010. 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.

No comments:

Post a Comment