Monday, August 16, 2010


Last week was an outside candle (high was higher than prior week and low was lower) but with long upper and lower shadows which says nobody really knows what to do. Makes sense given there's little liquidity in the market.

On the daily chart (not shown) the daily hammer for the low at 1.0351 looks as though it could be invalidated and this would not be positive since there were prior tests at 1.0332/48/49. I may try a small short at that level (it will very much depend on the behavior of RSI on the short-term charts which means momentum and price must bounce—none of this business of a bounce in momentum accompanied by a dithering about of prices) but tight stops are critical. Going back to the weekly chart, the long term uptrend line is coming in at 1.0041. You can see why you'd want a tight stop. Going below the nearby support would be reason to short the pair. Another possibility for a short is 1.0482/83 which is both resistance as well as the location of the 10 and 20 day SMA. If it reached that price and began to falter one might want to sell. Should the pair rally beyond there, the pair will encounter stiff resistance up to 1.0675.

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.

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