The pair broke below some nice support at 1.5922 so perhaps it will continue down for a bit. Next support levels are at 1.5880, 1.5830 (December low), and then 1.5763. Below that, it could fall to the bottom of the downward channel (or bull flag for the still optimistic). Before that happens, however, or a rise for that matter, it needs to quit its loitering. Lights, camera, action!
I shorted at 1.6001 and just took partial profits at +92 pips. Since it’s near support, the pair could bounce a bit. However, both price and RSI have recently broken below their uptrend lines on the three-hour chart. This hints at additional weakness. If it does bounce, I may add to my short position depending on what price is doing. What I mean when I write that is that I’ll be looking at candle behavior—e.g. upper shadows hint that higher prices are being rejected—and price patterns.
Now that the BOE has published its interest rate decision—no change to rates or plans for quantitative easing. In other words, business as usual because after all, it’s worked so well so far, right?—perhaps the picture will become a bit clearer.
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.