I haven't blogged about this pair in a while—that doesn't mean I haven't traded it but I can only write so much as I write the blog for free. Price is currently at the bottom of an upward sloping channel. Yes, it could be a bear flag as the pair gets ready for another drop down but there are other interpretations. Time is about equal for the up and down legs of the move so I'd expect a move up. If it went to the top of the channel….well, let's just say that would be a nice tidy profit but I'm thinking that 1.0658, the lower of the three consecutive candle tops (July through September), is achievable. In order for this to happen, the pair needs to scale 1.0374. If you didn't get in at the breach of resistance last week, entering around 1.0130/40 would be at the .618 retracement of the most recent short-term move up. The stop can be fairly close below .9977 (the lower shadow of October's candle).
Even if you're overall bearish on this pair, seeing this as an ABC correction, leg C would have to be up. At .618 of A (1.9058 to 1.3065) that would be a nice long. However in this view it's not clear that wave B is over.
The weekly chart (not shown) showed that last week was an inside week. This indicates indecision but since the pair also breached resistance at 1.0230 (Oct 8th high), it could also signal a bottom is in place. We'll just have to see.
Here's the monthly chart (my trades don't show on the monthly chart because I use a different charting package for weekly and monthly charting).
© 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.