Tuesday, March 30, 2010


When I first looked at this pair this morning I was tempted to short because it was at resistance at the 139.25/87 level. 139.21 was .618 of the move from the 2/17 high of 143.65 to the low of 132.03. This price zone is also a fib confluence area and has served as prior resistance. However, closer examination showed one could make a case for going long.

For one thing, the pair kept probing higher. It's true the candles had upper shadows (and since it was near resistance one would be justified in thinking this was price rejection at higher levels). But it had also had a very weak pullback to a low of 138.05 prior to these new highs. Momentum, as represented by RSI, didn't seem to be falling off which is bullish. Finally, my stop could be tight. As a result, I went long at 139.58. The stop is better than breakeven and I've taken some partial profits at 140.24 for +66 pips.

The pair reached a high of 140.56 so far today, just before the identified resistance level of 140.57. If it can make it through here it can probably get to 141.50. If it falls back, watching momentum and price behavior is important in order to decide whether to short or to add to longs. Whichever direction you trade it, you want to keep tight stops.

Support is at 140.07, 139.46, 139.09, 138.50, 137.07, 136.55, 135.19, 134.53 (strong), 133.92, and 132.03. Resistance is at 140.57, 141.50, and 142.64.

Here's the one-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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