Monday, November 29, 2010


The overnight low was .9585. This is just below the uptrend line from June (currently .9596) and a weekly EMA. One might expect a rally but after bouncing to .9699 early this morning, the pair dropped back to .9623 which is a .618 retracement. That's bit deep for a sustainable rally and if it continues to drop, one will want to watch a retest of the uptrend line very closely on the hourly chart. Another bounce from there brightens the pair's prospects. However, any rally will run into resistance at .9699, .9729, .9817 and .9853. These might be shorting opportunities if bearish sentiment continues to blanket the pair.

Why wouldn't I assume the uptrend had resumed with any rally? From the 1.0183 high the pair dropped to .9725. It then bounced to .9954 which was a 50% retracement and failed into the current decline. This suggests a secondary top. Looking at the hourly chart, one can trace out an ABC correction. The 6AM candle that just completed is a hammer so support is at .9623. Additional support is at .9585, .9540, and .9408.

All that said, the size of the rally from the 2008 low is significant and the pair probably will rally from .9408.

Here's the hourly 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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