The pair did break its trend line yesterday, and dropped back into the broader downtrend channel. It's impossible to say with absolute certainty that the pair won't climb out again., especially with the bullish RSI divergence. It's also hovering just below the broader channel line as though it doesn't really want to leave to go lower. A short here is possible only because the stop can be tight. Note that if it breaks upward it now has two nearby, short-term resistance points—the line of the broad channel and the line of the former small channel. You can see I added another short position yesterday on the break of the trend line. Neither can cause a loss for me since the former, from 1.3700, and the latter, at 1.3644, are both profit stopped. The pair has gone as low as 1.3540. I wrote yesterday that a reasonable price target was 1.3522/32. Since it has largely achieved that I just took some profits off the table from the 1.3700 trade for +150 pips.
Support:
1.3522/32
1.3500
1.3361
1.3263
Resistance:
1.3589
1.3670
1.3750
1.3788
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.
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