After my post last Thursday, I did go long at 1.3026 but did a stop and reverse this morning at 1.3075. So I made +49 pips which is not what I was expecting when I went long. I still believe the pair could rally to 1.33/1.34 but the sentiment is against it and the second rejection at 1.3145 is significant. As of now, it has broken both its short-term uptrend line and RSI has broken its uptrend line on the three-hour chart. Now it's back near its low—the daily hammer low from last week which is at 1.2970. A break of that could lead to 1.28. However, buyers may come in again and a rejection of that level could be encouraging. I just took partial profits at +80 pips if that happens.
Best thing in such a strong downtrend is to short the rallies. If you're going to go long, watch momentum on the short-term charts. But again, this is late August so traders need to be careful in this increasingly illiquid market.
Here's the three-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.