Tuesday, March 23, 2010

GBPJPY—weak and somewhat directionless

My remaining short from 137.96 profit-stopped out at 136.26 for +170 pips.

I just shorted again at 135.81. I would have preferred to have shorted somewhat higher but I missed the high last evening (EST) of 136.55.

The reasons I shorted are that the pair is in an overall downtrend, I was far enough above the longer term uptrend support line to make a reasonable profit even if it wasn't penetrated, and there's a slight broadening pattern on the hourly chart that suggests to me lower prices may be in store. In addition, momentum doesn't appear to be supportive of higher prices.

If you consider that the upward channel on the daily chart could be construed as a bear flag, a price target can be calculated at 129.05. It may not make it but this isn't out of range with other price targets I've calculated for this pair since late 2009. However, it must break 134.30/53 for this to be viable. It's not a sure thing it will do this. For one thing, there are hammers forming on the hourly chart, signaling that the pair may be trying to "hammer" out a bottom. In general, though, the pair is somewhat directionless right now. It will find its way eventually.

Resistance is at 136.55, 136.92 (strong), 137.50 and 138.42. Support is at 135.19, 134.53 (strong), 133.93 and 132.03.

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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