My long trade in USDJPY (from 91.15) reached a high of 92.04 early this morning (EST) and I took partial profits at +70 pips. I’m glad I did as it has since retreated a bit to a low of 91.66. I’m profit-stopped on the pair so I’m not too concerned about its behavior except to note that I may go short if it breaks definitively below 90.73. That would also be just below the uptrend line from late November. Unless it does, it’s still range-bound.
On the three-hour chart, the pair could be starting to form the right shoulder of a Head and Shoulder (H&S) pattern. It’s a bit too early to tell. There is also negative divergence between price and RSI. Both these things are bearish which is in line with the bearish sentiment surrounding this pair.
Another negative sign is that at least so far the retracement from the January 7 high to the recent low on the three-hour chart has been just at .382. If this is all it can achieve, then the up move is weak.
Resistance levels are 91.80, 92.50, 93.21, and 93.77. I’d probably take more profits off the table at each of those levels since sentiment is so bearish.
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.
Thursday, January 14, 2010
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