I have one long position from .8175 which is performing well, up over 400 pips this morning.
In addition to breaking above an ascending triangle on the three-hour chart, the pair confirmed its double bottom when it rose above .8551. Some might say it's a triple bottom but there should be at least a few periods between two bottoms and the ones at .8067 and .8082 are more classic with eight days between them whereas the bottom of .8073 and .8067 only had two days between them. More is better in this case. Even eight days is not great but we'll take what we can get. These were both sharp bottoms rather than more rounded, gradual ones (which I prefer but it is what it is).
Now that it has been confirmed there is a price projection of .9035. Do I believe it? Does it matter whether I believe it or not? I'll just have to keep an eye on momentum. If it starts to falter, especially in the presence of other weakness (i.e. candle formations) and near resistance, then I'll probably at least lighten my long. As far as adding longs, I wasn't around when the pair broke above .8500 so I didn't add. At this point all I can do is add on pullbacks if that's what I want to do.
The pair is running into some resistance at its current levels where .8595 was identified last week as resistance. Tthe high this morning was .8614 so far and the pair is overbought (above 70 on RSI) on the shorter-term charts. More important resistance will rear up at .8707/28. This is 50% of the .92390 to .8067 move, polarity, and a fibonacci calculation of price target based on corrective wave behavior. If it can make it through there then the .9035 may look more feasible.
Support is at .8551/46, .8495/88, .8400, .8364/56, .8258, .8195, .8133, .8082 and .8067.
I'm having trouble with posting charts this morning so I'll post a chart later.
© 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.