On the weekly chart the symmetrical coil I wrote about last week appears somewhat less significant but also less reassuring to the USD bulls since it occurred during a downtrend and these patterns are often continuation moves. However they don’t have to be.
There are various ways to trade the break from a triangle. One way is if it breaks, get on board. A more conservative approach is to watch it break, wait for it to return and retest and then move again. If it moves a second time in the same direction one can place the trade. A third way of course is to be contrary and assume a move up to the other line in the triangle, regardless of any break below or above the nearby line. I like this approach better when it’s not so near the apex of the triangle but it can still be workable. The point is that however you trade it the triangle line offers an opportunity for a tight stop, especially if you can combine that line with other key support or resistance.
The roughly 1.0264 of the lower weekly line does correlate with other support and resistance in the 1.0250 to 1.0350 range. If it breaks below this line then the uptrend line in red is coming in at 1.0040. The upper line of the triangle is at 1.0588, right on a fib confluence zone so it adds to the resistance. If price breaks upward it would be encouraging to USD bulls. Additional resistance is at 1.0677 and of course the 1.0855 price.
Momentum on the weekly chart (as represented by RSI) is generally encouraging as it hasn’t become oversold. I’m continuing to watch this pair closely.
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.