USDCAD—Déjà vu all over again

My long from 1.0522 stopped out at breakeven. This is just one of those days. I have just gone long again at 1.0527. On the 15-minute chart you can see a Gartley pattern (outlined in blue) so that gave me the incentive to try again. It's not a perfect Gartley but it may be close enough. We'll see.

Here's the 15-minute 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.

AUDUSD—high of 8839 so far

I took some partial profits at .8822 for +87 pips. Aussie's little rally ended at .8839 and I added another small short position at .8817.

Support:

.8700/22/35 (round number, broken uptrend line from 2/5 low and Dec. low)
.8614 (last swing low--three hour chart)
.8592 (uptrend line drawn from May)
.8578 (Feb low)
.8569 (Oct. low)

Resistance

.8798 (Tuesday's high and .618 retracement of the last down move)
.8839 (today's high as of 9:45AM EST)
.8916/21/30 (8921 was yesterday's high)
.8978 (uptrend line from August)
.9000/48

© 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.

USDCAD—tried another long

My two long positions at 1.0516 and 1.0524 stopped out at breakeven. After chewing on it for a few minutes and watching the price action on shorter-term charts, I went back in long at 1.0522. It dipped to 1.0511 before climbing again so let's see if this position can hold.

© 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.

AUDUSD—the last hurrah?

This has been an interesting ride this week. Euro bulls are fierce but they have nothing on the Aussie fans. The pair drops, mucks about, and goes back up again. Despite that, there are signs of weakness and eventually this pair should drop a good bit more. Yesterday may have been the last hurrah before it does.

My short yesterday was taken out at +5 pips. I then watched as it climbed to .8921 and shorted again at .8909 with a very tight stop. I was thinking it might make it back to the broken, daily uptrend line from August, but no. Obviously, all is well this morning and it has touched a low of .8787. Alas, it is now starting to rally. Grr. This is tough support but I don't think it's going to hold. Notice the bearish divergence with RSI on the hourly chart (lines are drawn in blue). Depending on how today turns out, we could end up with an evening star formation on the daily chart.

Support:

.8700/22/35 (round number, broken uptrend line from 2/5 low and Dec. low)
.8614 (last swing low--three hour chart)
.8592 (uptrend line drawn from May)
.8578 (Feb low)
.8569 (Oct. low)

Resistance

.8798 (Tuesday's high and .618 retracement of the last down move)
.8916/21/30 (8921 was yesterday's high)
.8978 (uptrend line from August)
.9000/48
.9093
.9330
.9406

Here's the 3-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.

EURUSD—broke the prior low

My three short positions stopped out at +23, +10, and +7 pips. I then shorted again at 1.3677. Obviously, this is now in profit with the new low this morning. I apparently wasn't confident enough to take more than one position which shows how the market can play with your head even when you're confident of your analysis. Also going against me this week was a new computer with new versions of all my software. This kind of thing is rattling (at least to me) and it throws me off my game. OK, back to the Euro.

Obviously, it has broken the low of 1.3586 which is good news (good, if you're not long this pair.) It didn't quite get back to kiss its broken trend line before doing so but, hey, whadda you do?) The pair has touched as low as 1.3532 so far, today. This is below the shadow of the daily hammer that formed Friday (and subsequent harami) which is a bearish sign indeed. Shorting rallies is the right thing to do and that's what I did yesterday when I shorted at 1.3677. Note that there is bullish divergence with RSI on the hourly chart (I drew the lines in blue).

Support

1.3586
1.3432
1.3361
1.3263
1.3000
1.2805 (the last uptrend line from Oct. 2008 which was last touched in March 2009)

Resistance

1.3586 (Feb 5 low)
1.3733 (broken short-term uptrend line)
1.3801 (Yesterday's high)
1.3839
1.4026
1.4194

Here's the one-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.

USDCAD—recovering?

My long position from 1.0256 hit its profit stop yesterday at 1.0526 (whimsical little stop point) for +270 pips. Whaaahh! I was hoping the pair would go on to do grand things and I'd have this little position left from the start of what I still believe is wave three. Oh well. If it meant that much to me I could have left the stop at breakeven. My two tiny positions at 1.0593 and 1.0620 also stopped out at 1.0570 for -23 and -50 pips, respectively.

I wrote yesterday that if the pair went below 1.0547 (the Jan. 25th and Feb. 3d low) there may be a much deeper correction in the making, possibly down to 1.0470. It did and touched a low of 1.0480. Is that it? Will it now begin to climb again? I opened two long positions at 1.0516 and 1.0524. They already have a breakeven stop.

What's my evidence for this unbridled enthusiasm on my part? It's really not unbridled but I still believe this pair is basing although yesterday's drop was a bit unsettling. Until it drops below 1.0208, however, I can't throw out months of analysis. Still, three daily bearish candles off the high of 1.0781 are nothing to sneeze at. The drop below the Feb. 3 low of 1.0547 was stinky. Offsetting these somewhat (for me) is the fact that RSI didn't also take a precipitous drop on the daily chart and seems to be holding. On the one- and three-hour chart, the candles show a harami pattern at the bottom. On the three-hour, it's a harami cross (long black candle followed by a doji) and is considered a strong reversal signal. I actually bought before I had this piece of evidence based on some clues on much shorter-time frame charts but I found this to be confirmation for the earlier decision. Also, you can believe I wasn't going to stay in if it dropped below 1.0450. Always use tight stops.

For now, anyway, the pair seems to be recovering. We'll have to see what today and the weekly close brings.

Resistance:

1.0547/53/57 ( Feb 3 low; downtrend line from Sep '09; Jan 28 low)
1.0600/1.0644
1.0771/76/81 (fib confluence and recent highs)
1.0848/53 (November highs)
1.0988 (Sept '09 highs)
Support:

1.0500
1.0480 (Yesterday's low)
1.0450/70
1.0407 (Nov. low)
1.0367 (Dec. low)
1.0208/25 (If it breaks this then USD bulls will be most unhappy)

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.

EURUSD--key support

Euro has dropped as low as 1.3595 and is hesitating a bit. The prior low is 1.3586 and it will be significant if it cleanly breaks this. I took partial profits on one of my short positions at +100 pips but I'm going to let all the rest either stop out somewhat above breakeven or run until they can't run anymore.

© 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.

EURUSD--broke trend line

You can see on the attached one-hour chart that the pair broke its trend line and then dropped. I entered three short positions at 1.3703, 1.3697, and 1.3690. I've already set the stops to breakeven. Euro may come back to retest the line. Here's the one-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.

EURUSD--at trend line

Last I wrote about this pair on Tuesday, I had two short positions. The one from 1.3711 stopped out for a loss at 1.3758 or -47 pips. The other one was a short from 1.4083 and it profit stopped out at 1.3803 for +280 pips. You win some; you lose some. Honestly, it's only slightly annoying that this was just about the high of 1.3839 and from which it has since fallen off. I should have piled back in when it didn't reach 1.3850 but I missed it and so I'm out of the Euro right now.

Currently, it's near the short-term uptrend line at 1.3710. If it bounces again, then it may be time for a small long but the pair looks weak overall. I think it may break and I'll try another short.

Support

1.3586
1.3432
1.3361
1.3263
1.3000

Resistance

1.3839
1.4026
1.4194

No chart because of my problems with my new version of Snag-it. I'm going to now try to figure out what the problem is since even if I didn't have this blog I would use it for my charts.


© 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.

GBPUSD—same old, same old

My short from 1.5871 is still on. At least on the hourly chart, the pair is fighting to stay above 1.5535 but it's still dancing on its downtrend line from early August, 2008 and that formed a significant channel. You can see this on yesterday's post. Dropping below that line, currently at 1.5535/45, would hint that lower lows were coming. I may add another short position if it does decisively move. Currently, though, there is indecision.

Support

1.5535/45
1.5359/75 (polarity; Jan 7th high)
1.5000/24 (flag target; round number)

Resistance

1.5765 (Yesterday's high)
1.5800 (round number; fib confluence)
1.5850 (EW boundary for current move down--wave 1 so wave 4 can't enter its territory)
1.5986 (Fib confluence)

No chart because of my problems with my new version of Snag-it.

© 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.

GBPJPY—1.4144 top?

I closed my short from 140.85 yesterday at 139.78 for +97 pips. I later entered another short at 140.27 which looked as though it was going to be stopped out and may be still, although now I've moved my stop to breakeven. I'm thinking there's going to be some bouncing around while things sort themselves out.

It still looks as though 141.44 capped the correction. This pair is overall weak with the last swing low to 138.26 deeper than the prior one at 139.31. On the three-hour chart, there's a bear pennant. It's at the bottom of this at 139.63 (the uptrend line from last week's low) so a break would signal lower lows to come. It could also climb up to the top of the pennant at 141.52 which would be significant resistance and a good place to add shorts.

I'm still expecting this pair to fulfill its price target of 130.45 from the confirmed double top in June and August if it breaks lower. As I've pointed out many times, though, GBPJPY spent most of last year in a range of 139.03 to 163.09. It's going to try to stay in this range. Let's see if it can.

Support

140.00 (round number)
139.63 (short-term uptrend line; bottom of pennant)
138.80 (recent low)
138.26 (Feb 5 low. Break of here would confirm double top of 141.42/44)
137.58 (support from 2009)
135.72 (Mar '09 low)

Resistance:

141.44 (recent high)
141.50 to 142.50 (fib confluence zone)
143.07 (February low)
144.00 (round number)
144.50 (original broken uptrend line from Jan '09 and downtrend line from Jan)

No chart because of my problems with my new version of Snag-it.

© 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.

USDCAD—nice correction

The two long positions I opened yesterday both stopped out at 1.0639 for a loss of -68 and -31 pips. My long position from 1.0256 is still open. I'm cautiously testing this low with tiny positions at 1.0593 and 1.0620. I'm not too concerned about the correction because I think the pair is setting up to move much higher. There are lots of dollar bears out there who say, "Nay, nay," of course. That's why the pair is struggling.

The pair dropped to a low of 1.0571. If it goes below 1.0547 (the Jan. 25th and Feb. 3d low) then there may be a much deeper correction in the making, possibly down to 1.0470. USDCAD needs to close above 1.0766 in order to show it's resuming its uptrend.

Support:

1.0547/57 (Feb 3 and Jan 28 low and this needs to hold to head off a much deeper correction)
1.0500
1.0450/70

Resistance

1.0600/1.0644
1.0771/76/81 (fib confluence, top of triangle and recent highs)
1.0848/53 (November highs)
1.0988 (Sept '09 highs)

No chart for this because I'm having trouble with my new version of Snag-it.

© 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.

AUDUSD--retraced nicely

I had good reasons for shorting yesterday at .8743--the pair was stumbling at a .618 retracement on the three-hour chart and showed an ABC correction. Hah! After starting down, it marched back up again, taking out my stop at breakeven. Overnight, it retraced almost all of the move down from .8916, reaching a high of .8905 this morning. Another good shorting point, right? Only if you believe in the overall weakness of the pair and only because you can have a really tight stop if it continues to climb. This is what I did at .8870.

This pair can have surprising strength. However, if you look at the daily chart, you see lower highs and lower lows until the last three days. Lower highs and lower lows are the definition of a downtrend. Pairs don't go straight down without some rallies as I've written before. This is why I believe this is still a correction. A downtrend of 16 trading days is not erased in four up days. However you can see where risk comes into play and why you must keep stops tight. If the pair continued to climb and eventually overcame the November high of .9406, that trend change would have started with a rally of four days when traders like me would have been saying was a corrective rally. You cannot predict! There are those that say you can with the stars or vibration or Elliott Wave or whatever. You cannot. What you can do is look for weight of evidence and weigh the probability that any given trade will be successful. You can also look at how much you can lose on each trade. In this case, once it goes above .8916 in some clear manner, I'm out. I would go back in with a short if it touched the old uptrend line from August (currently .8967) but I'm not willing to endure losses to that point. We'll just have to wait and see.

Support:

.8798 (Tuesday's high and .618 retracement of the last down move)
.8735 (Dec. low)
.8614 (last swing low--three hour chart)
.8578 (Feb low)
.8569 (Oct. low)

Resistance

.8916/30
.8967 (uptrend line from August)
.9000/48
.9093
.9330
.9406

No chart for this because I'm having trouble with my new version of Snag-it.

© 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.

AUDUSD--ready to turn down?

If one looks at the daily chart, one sees that the pair made a low of .8578 which is exactly where the daily 200 SMA came in. That, with the doji that formed on the low, hints that more upside could be in the cards. A look at the 3-hour chart, however, shows something a bit different with its ABC correction. The pair also seems to be stalling at the .618 retracement of the move down from .8916. Given those two things and what I believe to be overall weakness, I just shorted at .8743. The entry is good because I can have a tight stop.

Support

.8735 (Dec. low)
.8614 (last swing low)
.8578 (Feb low)
.8569 (Oct. low)

Resistance

.8798 (yesterday's high and .618 retracement)
.8916/30
.9000/48

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.

GBPUSD—correcting

My short position from 1.5995 was taken out in the correction yesterday at 1.5745 for a profit of + 247 pips. My short from 1.5871 is still on, although it came within a hair of being taken out as well.

While it still looks like a bear flag on the shorter-term charts, the daily chart shows the pair dancing on a downtrend line from early August, 2008 and that formed a significant channel. A definitive drop below that line, currently at 1.5535/45, would be deadly for the pound as it would also be below the low of 1.5535 from Monday. It's a real nail-biter as to whether it will happen or not and the indecisive candles reflect that. I may add another short position if it does decisively move.

Support

1.5535/45
1.5359/75 (polarity; Jan 7th high)
1.5000/24 (flag target; round number)

Resistance

1.5764 (top of flag on 3-hour chart and today's high)
1.5800 (round number; fib confluence)
1.5850 (EW boundary for current move down--wave 1 so wave 4 can't enter its territory)
1.5986 (Fib confluence)

Here's the daily 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.

GBPJPY—finally finished correcting?

The correction took out my last short position from 140.92 for + 69 pips. The pair reached a high of 1.4144 yesterday before falling back. I entered short at 140.85 and the pair is currently in profit. I had thought the pair might reach above 141.61 but it looks as though 1.4144 might have capped the correction. Of course, I could be proven wrong. The uptrend line from last week's low is coming in at 139.29. It could bounce off it again. I've been writing for a couple of weeks at least that this pair hasn't fulfilled its price target (130.45) from the confirmed double top in June and August so there's still good potential for the downside if the trend resumes. On the other hand, GBPJPY spent most of last year in a range of 139.03 to 163.09 so it may be trying to find energy to scoot (or saunter) back to the top of its range.

Support

140.00 (round number)
139.43 (short-term uptrend line)
139.29 (yesterday's low)
138.26 (Monday's low)
137.58 (support from 2009)
135.72 (Mar '09 low)

Resistance:

141.44 (yesterday's high--141.42 was it for today and 141.43 was Feb 4th high)
141.50 to 142.50 (fib confluence zone)
143.07 (February low)
144.00 (round number)
144.50 (original broken uptrend line from Jan '09 and downtrend line from Jan)

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.

USDCAD—still sideways

The pair's rise has been neatly stopped and it's now in a range of 1.0644 to 1.0766. The four long positions I opened yesterday, stopped out at just above breakeven. I then opened two more, one at 1.0670, thinking I was getting a great price and one at 1.0707, thinking surely this correction is over. The answer seems to be, "Don't think." Obviously, both are underwater. At least I still have a long position from 1.0256 open. What's exciting is that the pair is being fought over by the bulls and the bears--this is why it's caught in this range and when it breaks out of it, up or down, the pair will have a direction. I'm actually thinking about picking up another long position at these prices since we're close to a support that needs to hold for the uptrend to remain serious. USDCAD needs to close above 1.0766 in order to show it's resuming its uptrend. A close much below 1.0625 will hint that all is not well.

Support:

1.0644 (recent lows)
1.0600
1.0547/57 (Feb 3 and Jan 28 low and this needs to hold to head off a much deeper correction)

Resistance

1.0771/76/81 (fib confluence, top of triangle and recent highs)
1.0848/53 (November highs)
1.0988 (Sept '09 highs)

Here's a 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.

EURUSD—weekly chart

It’s been a while since I posted a weekly chart of the Euro. Wave c of 2 appears to have completed at 1.5144 in November so, as I’ve written several times, we’re in wave 3. Third waves are fast and strong and I think that’s a fair characterization of the market recently. The pair has been correcting from its low of 1.3586 on Friday to a high of 1.3746 today. There’s room for additional correction but the pair looks weak. I can’t see that it can get above 1.3775 but its vision may be better than mine is. Should it climb above 1.38 – 1.3850, I’d probably lighten my short from 1.4083. I just added another short position at 1.3711.

Support is at 1.3586, 1.3432, 1.3361, and 1.3263. Then there’s the big 1.30, ha-ha, which would be interesting (and profitable). The daily uptrend line from last Oct. 2008is at 1.2841. Resistance is 1.3750/75, 1.3800, and 1.40. Should we see 1.40, I think shorting would be a grand idea.

Here’s the weekly 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.

GBPUSD—at bottom of flag

The pound has been correcting in what appears to be a bear flag. It’s currently at the bottom of the flag at 1.5572. I still have two short positions on from 1.5992 and 1.5871 so I’m not in a position to go long but it’s possible there will be another climb to 1.5695/1.5717, the top of the flag depending on how you draw the line) before setting a stage where the downtrend could resume. Notice the subjective nature of trend lines in my last statement—some people draw them through candle shadows; some don’t. In this case, I’d be inclined to draw the line from the highest high at the beginning of the flag but the second line (in blue) “fits” better in that there are more touches. A break below the flag would target 1.5024, near a sweet psychological round number. Oo-la-la. I can hear the gnashing of teeth and tearing of garments if we get anywhere near that number.

Support:

1.5535 (yesterday’s low)
1.5359/75 (polarity; Jan 7th high)
1.5000/24 (flag target; round number)
1.4852 (uptrend line from Jan 2009)

Resistance:

1.5695/5717 (top of flag)
1.5735 (.382 retracement of move down from Feb 2nd)
1.5800 (round number; fib confluence zone)
1.5850 (EW boundary for current move down—wave 1 and wave 4 can’t enter its territory)
1.5986 (Fib confluence)

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.

USDCAD—correcting

USDCAD has been correcting and on the one- and three-hour chart is coiling in a symmetrical triangle. If you believe the Elliott Wave interpretation of prices, breakouts from triangles are to the same direction from which the price entered the triangle—in this case, it would be to the upside. If you believe classical pattern analysis then the break can be in either direction although it favors continuation. Regardless, price is now at the bottom of the triangle. On the one-hour chart, the most recent candles are doji, representing indecision. There is quite a bit of nearby support so I have added four small long positions, two at 1.0690 and two at 1.00692. Why separate positions? Because I still have my long position open from 1.0256. My broker doesn’t allow me to take partial profits off the table from positions added later than the first one. By having separate positions I can close them out at different times. Do I think the correction is over? I have no way of knowing but this is a good entry point for me because the stops can be tight.

Support (various uptrend lines, fib confluence, recent lows):

1.0675
1.0651/57
1.0601
1.0547
1.0409

Resistance:

1.0771/76/81 (Fib confluence, top of triangle, and recent highs)
1.0848/53 (November highs)
1.0988 (Sept ’09 highs)

Here’s the one-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.

Be careful about corrections

Most of the pairs are correcting so far today. It doesn’t mean that more lows aren’t coming in such pairs as the Euro, pound, Ozzie, etc. However, no pair falls straight down and rallies are common in downtrends just as reactions are common in uptrends. The point is this—decide on the level you’re going to short and wait for it to happen. If the market doesn’t get there, you can always short on a break of support.

I’m doubtful we’ll see declines to the extent we saw them last week—a rough count of the profits I took last week alone add up to over 3,100 pips—a similar amount of pips to what I made in the entire month of January. http://forexreflections.blogspot.com/2010/02/january-trade-resultsup-3116-pips.html

However, you don’t know what the market is going to do. What you do know is that it's important to carefully select entries and keep your stops tight.

© 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.

USDCAD—triangle

This pair has corrected a bit off its 1.0781 high reaching a low of 1.0644, almost .618 retracement of the most recent climb. It’s in a triangle as are many other pairs. The bottom line of the triangle, at 1.0681 is nearby support. Just beneath that are uptrend lines that offer additional support at 1.0637 to 1.0681. If it breaks above the triangle, the November highs of 1.0848/53 are the next target. 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.

GBPJPY—triangle

GBPJPY dropped to a low of 138.26 before rising to a high of 139.93 this morning—not a great move up so further lows may be in store. However, I closed my short position from 144.00 for + 463 pips. On Friday, I had entered another one at 140.92. This one is currently at 165 pips profit.

On the one- and three-hour charts, you can see the pair is coiling in a small symmetrical triangle. A break below this would probably mean additional lows today. As I’ve written before, this pair had a confirmed double top in June and August and the price target from that pattern was 130.45. That would be pretty.

Support:

138.26 (today’s low)
137.58 (served as support several times in 2009)
135.72 (March ’09 low)
131.47 (March ’09 low—yes there were two lows in that month that could be supportive)

Resistance:

1.3993 (today’s high)
140.00 (psychological round number)
141.61 to 142.62 is possible (142.62 is the redrawn uptrend line)
143.07 (the February low before this debacle)
144.00/19 (round number and the original, broken downtrend line)

Here’s the one-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.

EURUSD—is that the extent of the correction?

Euro continued to tumble after NFP on Friday to a low of 1.3586. On the daily chart, that low was in the shape of a hammer. It since bounced to a high of 1.3714 today. On the three- and one-hour chart, you can see the zigzag or ABC bounce. I took another short position at 1.3686. My stop is already at breakeven. It wasn’t much of a correction—I can’t believe that Euro bulls can’t do better than this, particularly with some traders taking profits but there you go. As long as the pair stays below 1.3833/57, the overall trend looks to be down. That would be a decent short area if it does correct further to that point. If it breaks below Friday’s hammer, it will likely decline much further.

Support:

1.3586 (today’s low)
1.3432 (Mar and May ’09 lows)
1.3361 (Aug ’07 low)
1.3263 (June ’07 low)

Resistance

1.3714/43 (today’s and Friday’s high)
1.3755 (top of EW 1 from March low and June ’09 low)
1.3791/3800/3833 (.382 retracement from Feb 3 high, round number and July low)
1.3855/57 (Feb. 4 double top). I doubt it will get above here)
1.3931 (polarity)
1.4000 (Psych)
1.4101 (50% of move down from Jan 13 low)

Here’s the one-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.