The evening star formation that looked possible yesterday morning on the three-hour chart never completed and my short from 1.4387 stopped at -73 pips. The pair reached a high of 1.4520 this morning where it’s hesitating as traders try to decide upon a direction.
Taking a look at the monthly chart, one can see that in breaking below a long-term uptrend line from 1985 (but only two touches prior to this), that the line could now serve as resistance at 1.5523. This was the April 14 high and within a general price zone that has been something of a magnet zone for many years. This strengthens it as resistance. If I redraw the uptrend line so that the 2009 low was the second touch, the line comes in at 1.3826. Of course once it got there there’s nothing to prevent it from dropping back to that 2009 1.35 low. Support is at 1.4389 (50% of long daily bars on 1/30 and 3/19/09), 1.4363, 1.4251, 1.4110, 1.3826, 1.3654, and 1.3503.
The pair will most likely struggle up to around 1.4476. A short there with tight stops could be profitable. If it breaks above that, then a long is possible with, of course, a tight stop. Resistance is at 1.4420/76, (today’s high and the 5/7 Friday doji low), 1.4640, 1.4703, 1.4851, 1.4889, 1.4918, 1.5055, 1.5173 (strong), 1.5391, 1.5499 and 1.5523 (April 14 high).
Here’s the monthly 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.