Since being above .9000 this week (yesterday’s high was .9069), the pair has broken several price targets. It ran into other resistance (May highs, etc) so the fall back to.8923 (nice little short trade right there but since I’m at a conference this week I haven’t been trading much) was not unexpected.
Now what? Will the next price be the .9364 resistance from April? It’s possible. Looking at the weekly chart, one could make the case that the pair has completed an ABC correction and is in a fifth wave up. I’ve labeled this in blue numbers and letters on the weekly chart below. This could be part of an overall second wave correction or just the pair resuming its uptrend. Using red letters I’ve labeled what could be a second wave correction which had the C wave topping at the last high. That would place us at the beginning of a third wave down with a correction currently taking place. That correction could extend up to .9350 or so. Given that the weekly downtrend line is coming in at .9340, this means there is still be a long trade possible.
On my three hour point and figure chart I have a price target remaining of .9450 and the chart is showing that the last buy signal (at .8880) is progressing nicely.
On the three-hour chart (not shown), the pair looks as though it’s trying to base at .8923 although a drop back to the July 22/23 lows of .8896 wouldn’t be a surprise. I’m not inclined to trade right now since I can’t watch the charts closely but I’d probably try a small long at that level with a very tight stop. If it approaches .9069 again, a short might be possible depending on momentum.
Resistance is at .9069, .9100, .9157, .9200 and .9353. Support is at .8923, .8896, .8859, and .8738.
All in all a very interesting pair right now. 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.