Early last week, before I escaped to the mountains of beautiful North Carolina for several days, I wrote that this pair appeared to be setting up for a potential short around .8531 since it was near resistance and in a general downtrend since March.
However the pair moved up in what turned out to be a strong weekly candle. It reached a high of .8578 which means it broke through key resistance at .8531. This price is near the 50% level of the move from March down to June. The pair then fell back to .8467 in what could be a three-wave correction on the three-hour chart. If this is true then wave C has been equal to wave A so far and one can make the case for additional moves up. What are some other signs there may be more upward price movement? On both my 3-hour and daily point and figure (P&F) charts, I have price targets of .9270 and .9100 respectively. On the three-hour chart I had a buy signal near .8550. Also on the three-hour chart, is a pennant with a potential price target of .8746. As a result of this I bought this morning at .8497. It almost immediately tried another thrust up. Let's see if it can make it.
The potential downside is that wave C could extend down to .8374. There's also a possibility this is a false breakout above .8531, something certainly not unknown in the Forex world. Additional downside probes to .8350 are possible but below that I'd assume the downward trend was resuming.
I haven't really had a chance to settle back into trading since I arrived home late last night. As a result, I've already moved my stop to breakeven.
Support is at .8467, .8430, .8374, .8350 and .8250. Resistance is at .8578/95, .8670, .8700, and .8808.
Here's the daily 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.