GBPJPY—nudging trend line

On the three-hour chart, GBPJPY just closed a candle a tad below the uptrend line that began in January 2009 with a low of 118.92. It also just broke a short-term uptrend line on the three-hour chart. The pair looks weak, with the last two daily candles showing indecisiveness and uncertainty. Yesterday’s high was 145.31. On the three-hour chart, it formed an evening star formation with this high, although the first bullish candle of the pattern didn’t even look as strong as it could because of its upper shadow. I shorted at 144.52. So far this morning it has dropped to a low of 143.55. Am I profit stopped? You know I am.

There is much room for more downside. Support levels are:

143.55 (this morning’s low)
143.07 (Feb. low)
142.00/02 (Dec. low and round number)
140.80 (50% retracement of 2009’s Jan. low to Aug. high and a fib confluence zone)
139.31 (Nov. low)

If the pair should rally, I doubt very much it can get above the high set yesterday. Resistance levels are 144.74, 145.31, and then 146.34. I’ll be shorting with both hands if it sees that last level.

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.