GBPJPY—resistance and above

As I wrote yesterday, it looks as though this pair is rallying within a C leg of an ABC correction. It did reach 131.77 this morning, within two pips of my hourly target of a C wave. It has since fallen back to a low of 131.11 where it's trying to base. There are many interesting geometric shapes on the shorter term charts so we'll have to see where this goes. While one can try shorts in this area up to 131.90 (see yesterday's blog), another good shorting opportunity is 134.17. It's important to keep the psychology of the market in mind—people see weakness in this pair based on the overall trend and are looking to short. However those that shorted the break of 130 a couple of days ago are hurting a bit. If the pair moves beyond 132, the pain increases and they'll start buying back their shorts. That feeds more upward price movement. At some point, though, the bears will probably win out given the big downtrend. All you can do is pick shorting points that make sense and go in with tight stops. The potential gains are great—probably down to 120 and potentially lower, a lot lower. For a weekly chart, the one I think most relavent, ee yesterday's blog.

© 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.