In any case, as you'd expect with profit-taking, the pair fell back to a low of .9709 earlier today. The pair looks as though it's trying to base here. It's a parity zone and about the .618 retracement of the most recent move up from .9542. I'd like to see it correct even lower but I took a long position at .9735. Parity is too much of a magnet for traders, especially with USD weakness. Once it gets there, if it does, it's doubtful it will move much above it but I'm not going to spend time fortune telling.
If this trade stops out, next support would be the week's low at .9542 and if that fails then .9462 and .9396 (.382 of the move up from .8770) will probably hold. I wouldn't be too surprised if it does stop out. Yesterday was a doji and with the move down today, it could be an evening star formation. If it does, then lower lows than those mentioned as support are probably in store.
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.
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