The high so far today has been .8317. This is near resistance of .8366 so there should be some sellers coming in. Note, too, that in addition to the price resistance there is a short-term downtrend line coming in from earlier this month.
Should it break upwards through this resistance, the next resistance levels are at .8499, .8525, .8578 and .8610. Support is at .8310, .8189, .8067, .8000, .7932 and .7830. Notice that while the resistance numbers are fairly close together, support numbers are not so if it begins to fall there's not a lot to catch it. The key is to watch momentum through an indicator such as RSI around the resistance levels. Ideally, you want to see strong momentum. On the three-hour chart you can draw an uptrend line under momentum as well as price which is good. If it breaks below the momentum uptrend line and price violates its trend line, then closing or reducing longs and possibly going short is a good strategy.
Here is the three-hour chart:
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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.
This is a double-bottom. So it can be taken for an entry-point of specialists' trap or turtle soup.
ReplyDeleteosamu
Thanks for reading my blog and thank you for your comment. At the date I wrote this it was a potential double bottom but is not confirmed as such until the price exceeds the high that takes place between the two lows. This price would be .8366 which it did go onto exceed but I don't know that at the time of this second low. The fact that it was a hammer was more significant at the time, coupled as it was with support and taking place after a downtrend. Double patterns are classic formations and are easy to see but are one of the least profitable patterns when used in isolation. The main reason is that people don't wait for the confirmation but the pattern itself is not very reliable as Bulkowski showed. This is why people often consider it a trap as you point out.
ReplyDeleteDianne Fecteau, CMT