USDJPY—bounce

There's been a bit of a bounce off yesterday's low of 84.73 which shouldn't have been a huge surprise. I went long this morning at 85.45 and took partial profits at +45 pips this morning. The pair's future direction is somewhat questionable in the short term. It was just a bit of a probe below the 84.82 low from Nov. '09. As I wrote yesterday, there was quite a bit of positive divergence in several time frames. What the pair does as it approaches resistance at 86.24/45 will be interesting.

Remember, though, that the downtrend is solidly in place and while one can trade a bounce one has to keep that in mind. A clear break below 84.73 would signal it's ready to scoot on down to newer, deeper, hand wringing lows.

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.