AUDUSD—closer to uptrend line

The overnight spike up took out the remainder of my short for a profit of +80 pips. The pair then immediately turned down again of course. The low so far today is .8779 versus yesterday's .8796. So the pair is edging closer to the short-term uptrend line from June, today at .8748. .8781 is also the .382 retracement level of the move up from .8067 on May 25 to the Aug. 6 high at .9222. Any bounce will find resistance at the 10- and 100-daily moving averages around .8835 and I'll probably try to short there. A definitive break below .8740 would be significant. Similarly, positive divergence and increasing momentum at the uptrend line would justify a small long position but be careful—there's lots of negative sentiment out there and it is August.

Support below .8740 is at .8715 and .8655/40 (July 19 low and 50% of June 7 to Aug. 6 rise). Resistance is .8895, .8992, .9050 and .9080.

Here's the 3-hour 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.