Monday, February 1, 2010

USDJPY—respected resistance

The pair respected the resistance I wrote about last week. On the three-hour chart, it bumped its head on the downtrend line coming in from January 6 as well as hitting the .618 retracement from the January 21 high. I placed two short orders—one at 90.78 and one at 90.73 (I took a second position because I took less of a position size than I wanted in the first one—in other words, trader error.)

Since then it dropped to 89.88. I took partial profits on the first position at 90.11 for + 67 pips. Obviously, both positions are profit-stopped.

This is a good time for me to mention how important it is to wait for the entry that your analysis shows is reasonable. It was Friday morning at 6:25 AM EST when I posted my chart that showed I was waiting for the entry around 90.71/75/81. The pair reached that price level by 9 AM, EST and I entered my position. Sometimes it doesn’t happen that quickly but the point is that you need to wait for your entry. Let’s face it. If the market doesn’t get to your entry, it’s already telling you there’s something off with your analysis. If it does and merrily blows past it, your good entry point has allowed you to set a stop that results in little loss. Learning to wait is mandatory in order to be a successful trader.

Resistance for USDJPY is at:

90.45 (downtrend line from January 6, ’10)
91.00/19/25/34 (round number, fib retracements and polarity)
92.32 (polarity)
93.77 ( January 7 high)
94.12 (daily downtrend line from May ’09)

Support is at:

89.51 (up trend line from November ’09)
89.00/14 (round number and January low)
88.01 (round number and support)
87.36 (December low)

© 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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