EURJPY—another try at resistance

I wrote yesterday that this pair was a potential sell around 114.74. It hasn't gotten there yet—after reaching 114.22 the pair fell back to 112.98. It now looks as though it's going to try again. You can see on the three-hour chart that price is so far confined within a upward channel. The upper channel line is coming in near resistance of 114.74 so that will make this a tough price level to break through. Using Elliott Wave (EW) theory, one could also make a case that any correction would end around 115. However if one sells at that level one needs a tight stop. The correction could target higher prices and if it breaks through the 114.74 resistance then there isn't much real resistance before 119.62. Certainly 119.62 would be a selling opportunity. However, if short. one would probably want to reverse and buy if it breaks 114.74.

There's negative divergence on the three-hour chart. Divergence is all over the place which means less on any given individual pair or more that the market is getting ready to change.

A correction downward could potentially see 1.0986 (50% of the most recent move up). Before that, though, the pair would find support at 113.00, 112.68 and 111.97.

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.