Monday, August 16, 2010

USDJPY—new low

I stopped and reversed this morning. The long trade from 85.45 profit-stopped out at +20 pips whereupon I went short at 85.63 and 85.54. I've already moved my stop to breakeven on both which is a bit tight but in this illiquid market I'd rather be out then begin to incur losses if the market spikes in the opposite direction. I can always get back in.

On the daily chart (not shown) there's a potential evening star formation with Friday's close being the second candle (and star) in the formation. Only if today closes deep within the Thursday's candle will this be confirmed. That close could be at or below the current price of 85.35. The low is below Friday's low. However with RSI on the hourly chart (not shown) moving to oversold, there's a chance there will be a rally. If one wasn't already short, a better trade would be to sell that rally if it takes place.

The weekly chart shows a gloomy picture with a multi-year downtrend and a potential fifth wave down taking place.

Support is at 85.18. 84.73 and 84. Below that there's not a lot of support. Resistance is at 85.96 and 86.45.

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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