As I wrote last week, the pair could get into the 1.40s before a correction. Look again at some of the numbers that show how far into them it could get. The .618 correction of the entire move down from 1.6041 is at 1.4450. A downtrend line drawn from that 1.6041 high comes in at 1.4557. The high this past January 13th was 1.4579. That's a clustering of potential prices. It could also go higher. For example, last week I showed how this could be a potential bat pattern and the high would be 1.4771. If you look at this as an Elliott wave C, then C will be 1.618 times A at 1.4998. Finally, as I mentioned awhile back, it broke above a speed line drawn off the Nov. '09 highs which hints it could return to that level.
All that said, the pair is overbought, the angle of ascent is steep, and there's negative divergence on the three-hour chart below as well as in other time frames. A correction, greater than the small one to 1.3775, is overdue. It would be great to see a dip to 1.3335 or at least 1.3637.
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.
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