The 3-hour chart is a tad messy. Yesterday's high of 1.5523 was followed by a drop to 1.5366 from which it has rebounded to 1.5474. There's a triangle formation and the pair may break out of it today or early next week.
The hammer low that I wrote about yesterday on the hourly chart was at 1.5386. This has technically dipped below that so it's bearish behavior. On the other hand, it wasn't by much so the area essentially has served as support again today. Also in play is the fact that the pair is still in an uptrend from the double bottom lows of 1.4785 and 1.4798 and that it's nowhere close to achieving the price target from that double bottom. Weigh this against the fact that it could be a wave four correction playing out and you're basically left with no clear answer as to direction.
If you're aggressive, which I sometimes am, you'd want to short. Overall I'm bearish on this pair. However, my plan, for the moment, is to wait for some definitive action from the triangle. Dropping below the 1.5366 or above the 1.5523 would be significant.
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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