When I blogged on May 6th that the USD could extend up to resistance on the weekly chart at 88.70, I’m sure some thought I was deranged. However it looks more and more realistic, doesn’t it, now that the high was 87.06 yesterday? If it overcomes that resistance it’s possible the Mar. ’09 high of 89.71 is accessible.
Despite those lofty thoughts, though, it’s important to note that the run since the 4/17 low has been almost straight up. This is unsustainable. It reflects the emotion that’s driving the market. The most prudent course is to not jump on board if you’re not already long. There is a Gann angle line that is coming in about where price is now so this serves as a bit of downward pressure as well. Yesterday’s candle was a doji, which after an uptrend can be a good reversal signal. One can reasonably expect a pullback to either of the less steep uptrend lines—either 82 or 75. At 82 people will start trashing the USD and at 75 they’ll be consigning it to the graveyard again. Either would be a desirable long trade.
Here’s the weekly 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.