It's difficult to tell what this little pullback was to a low of 1.5670. While Cable broke its short-term uptrend line, it didn't break it by much and the hammer that formed on the three-hour chart found support on a daily speed line. It has since climbed above the trend line again. The drop took place on the last day of the month—it might only mean there was profit-taking in play. The rise on the first, this morning, hints at that. I still have a daily bull flag I'm playing off of and this is likely an EW C wave that isn't quite complete. I also have price targets from my point and figure charts that are higher. All those things looks bullish and would normally have me in the long position.
However I'm not going to enter now. For one thing it's Friday and I don't like taking on new positions just before the weekend where I aggressively re-analyze my charts. For another, I don't like that yesterday's long position couldn't get any legs and I was stopped at breakeven. More important is the fact that there is tough resistance above. The pair failed yesterday morning at 1.5923 (below the early August resistance of 1.5998). I'd like to see how it behaves as it approaches that price level again. Finally, I've had great profits from this pair this month. Why throw them away while the pair dithers about uncertain if it's going up or down?
So I'll hold off for now and look at it again on Monday morning.
© 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.