Tuesday, January 5, 2010

GBPUSD—speaking about flags

I wrote about the bear flag on the Euro daily chart and a look at the GBPUSD daily chart shows a bull flag that either is or isn’t going to pan out. I’ve outlined it in red on the chart.

What’s interesting about it is that there was a break above the flag, then a throwback (a return to something after an upward breakout) and now it’s hovering at the breakout point. I compressed the chart so you can’t see that the last two daily candles had long upper shadows, hinting that the pair is rejecting higher prices. Are those two days representative of anything? That I’m unsure of since two days ago was the New Year and yesterday probably saw many traders scratching their heads.

Regardless, a return to a flag usually hurts subsequent performance. This pair needs closer watching on small time frames. Here’s the daily 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.

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