All currency pairs can be tricky especially in illiquid market times which the August market tends to be. However I used classical technical analysis which is freely available to learn—techniques such as support and resistance, patterns, and candle behavior.—things in other words that don't rely on the mystical and "sacred" techniques others put forward with little evidence. This combined with risk management is what results in successful trading.
The price high so far has been 1.0385. This is well above the 100 day Simple Moving Average (SMA) now at 1.0311. The pair is also back inside its triangle that has been so apparent lately. However, this pair is still not on a roll until it overcomes some dreaded resistance ahead. The 200 SMA is at 1.0397 and at the same price level is Fib confluence, and polarity. So it has to make it through that. Then there is the 1.05 to 1.0677 area of resistance. If the pair should head down again, support is at 1.0311/300, 1.0274, 1.0205, 1.0146, and 1.0108. Below that there's support just above parity from the longer term uptrend line on the weekly chart.
How could you get into this trade if you're not already in? Today might be tricky with the Fed policy statement coming up but you could wait for a pullback, perhaps to the 100 SMA. With the pair oversold according to RSI on the shorter-term charts, this is possible. Or you could wait for a breakout of the 1.0397 area. If you go long you want to watch the trade around the 1.05 mark and perhaps lighten up or take profits. If one is bearish, you could short at 1.0397 with a tight stop. I'd watch momentum carefully before shorting. Regardless, caution is in order. I can't say it enough. Markets are less liquid and there are lots of conflicting signals.
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.
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