Friday, July 23, 2010

Summer Fridays

I’m not trading on Fridays during the summer.

My only open position is the Swissy long I wrote about below. The remainder of my Euro short from 1.2882 profit-stopped at +20 pips and my AUDUSD trade stopped at breakeven. I’m watching the cable and USDCAD for possible entries next week as well as the Euro.

See you Monday.

USDCHF—struggling at resistance

My long from 1.0414 didn’t get stopped out yesterday although I had the stop within a couple of pips of the low at 1.0395. I didn’t have much hope for this trade because of the energy with which it had probed below 1.04 (last week’s bottom) but there you go. If I’d been watching the chart minute by minute I might have bailed out of it; fortunately I was traveling so I didn’t have that opportunity. I don’t agree by any means with everything Gann said but I do agree with his writing about making your decisions away from the charts—that is printing them off, deciding what to do and when, and not being influenced by moment to moment prices. He wrote in Truth of the Stock Tape, “The best way to read the tape correctly is to stay away from it. Get the records of the day's prices and the volume of sales, make up your chart and judge it when you are not influenced by rumors, gossip or reports or by the way the tape looks when it is making a move that only lasts thirty minutes or one hour. ... Again, I emphasize the fact that the correct way to read the tape and interpret it accurately, is to stay away from it.”

Currently, the Swissy is fighting resistance at 1.0457. If it manages to get through this then it will find some significant resistance in the 1.0502 to 1.0546 price zone, an area marked by prior support and resistance (polarity) and fib confluence. Beyond that, just below 1.06 is additional price resistance and the 21 day simple moving average. So this trade isn’t quite out of the woods yet. I could always sell here but I’m long and my stop is now at breakeven so given that I don’t usually trade on summer Friday’s and given that I have no risk, I’ll stay in the trade.

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.

Thursday, July 22, 2010

Traveling today

I'm traveling today so won't be trading.

USDCHF--at support

USDCHF has dropped to support with a low of 1.0398. That's just two pips below the 1.0400 that was double tested last week but even though the second of two hourly candles seems to be trying to base I find the vigor of the move down a bit troubling. My buy order was executed at 1.0414. I have a tight stop obviously. Let's see what happens.

Wednesday, July 21, 2010

June Trading Results

June turned out well with profits of 4,673 pips. I don't have time to list the results for each individual trade but one can look back in the blog to find the detail. By pair, the results were:

AUDUSD +2,169 pips (the clear winner for me)
EURCHF +230 pips
EURGBP +245 pips
EURUSD +1,222 pips
GBPJPY +218 pips
GBPUSD +99 pips
USDCAD + 456 pips
USDCHF +34 pips (every pip counts, right?)

2010 has been filled with great trading opportunities that have suited my style. I took advantage of them with hard work using classical technical analysis. I didn't use some weird mysterious approach; I didn't use the stars. This is not to say that there might not be some validity in astro-economics. It's only that I haven't yet discovered it if there is. But the point is, you don't need it if you're willing to study the charts and trade with iron-clad discipline.

I always have mixed feelings about posting results since it puts the emphasis on success in the one dimension of profits. But one can be a good trader and have a losing month. Indeed, I'd expect one for myself at some point since I've been profitable every month since last fall when I started this blog. Maybe July will be it with the summer doldrums. However, if I have good reasons for my trades, if I can justify them with weight of evidence, if I use good risk management, then I am a good trader and the results are irrelevant.

Since October 2009 when I began reporting my results, the pips have been:

2010
June +4,673 pips
May +5,352 pips
Apr +2,366 pips
Mar +6,141 pips
Feb +5,915 pips
Jan +3,116 pips

2009
Dec +2,092 pips
Nov +2,054 pips
Oct +1,994 pips

USDCAD—coiling

On the daily chart USDCAD is coiling in a large symmetrical triangle. Regardless of which way it breaks the move will be a large one. If upward, the price target, assuming a breakout at 1.0579, would be 1.1504; if downward, assuming a breakout at 1.0265, the target is .9340. You'd definitely want a clear breakout before trying to trade it and in any case there can be fake-outs with triangles. Still…it would be interesting.

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.

GBPUSD—looks corrective

The daily action looks corrective before another downward move. The price swings back and forth show strong feelings on both sides. 1.5121 is the bottom of the channel on the daily chart; RSI has already broken below its uptrend line so let's see if price follows. Support is at 1.5151, 1.5121, 1.4949, 1.4874 and 1.4854.

The channel top is 1.5523 which is also near the April 14th, 15th and 26th highs. That would be a lovely short. Before the top there is resistance at 1.5197, 1.5242, 1.5351, 1.5447 and 1.5472.

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.

AUDUSD—another drifter

I bought yesterday at .8791 based on the three-hour chart. The pair rose after a hammer candle shadow touched support at .8714 and made a strong up candle. I'm now profit-stopped (just barely). However I don't have a lot of hope for this trade. All the pairs seem to be in the summer doldrums today. Or waiting for Bernanke's testimony, ha-ha.

The pair can only drift for so long. Eventually it will either resume its uptrend toward the confirmed double bottom price objective of .9040 and potential Gartley pattern I wrote about yesterday or it will head down in accordance with wave and broken trend line interpretation. Let's hope it doesn't leave too many traders lurching with losses in the meantime.

There's divergence on the hourly chart. There are probably buy orders at .8800 so a sustained drop below there won't be good news for bulls. After that, support is at .8714, .8668 and .8633. Resistance is obviously the big bugaboo at .8860/80.

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.

EURUSD—weak

I sold short yesterday at 1.2882, not a great price but Euro has dropped some and I've taken partial profits at +71 pips. Its most recent low is 1.2792 and a drop below there could signal additional lows. The action is a little raggedy right now—there were four hourly candles with lower lows and then this last hourly candle had a higher high and higher low. It's working out the oversold status on the hourly chart and there may be a bit more of a bounce. It's easy to suspect summer doldrums at work but the Euro should have finally completed the C wave and be ready to head down again. It did drop below yesterday's hammer low on the hourly chart at 1.2840. In addition, the strongest candles are the downward ones with the white ones being small. Additional support is at 1.2768, 1.2683/60 and 1.2523.

As I wrote yesterday, however, the potential is still there technically for the pair to reach the 1.31 area. 1.3108 is 1.618 the length of the A wave; 1.3150 was the price target of the bull flag from the three-hour chart last week; 1.3094 was the spike high from May 10th. It's not looking as likely given its tired behavior. Until this pair overtakes those numbers it's a waste of time to talk about the price potential of the inverted head and shoulders.

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.

USDCHF—directionless

My buy order at 1.0415 has not been executed so I'm going to have to decide to leave it as is or raise the price.

Yesterday was an inside day which means the price action was within the prior day's range. Inside days can signal that momentum is declining or that a congestion area is forming. However without a strong trend it's not that meaningful as in this pair. There's been a general lack of direction in USDCHF—the range over the last five days has been 1.0400 to 1.0550. Eventually, hopefully before we all die of old age, it will find a direction.

The three-hour chart is unremarkable except the recent high at 1.0543 is a couple of pips lower than the prior high yesterday. It looks like another directionless summer day. I may buy at 1.0471 which is the short-term uptrend line but not if there doesn't appear to be some energy. If it drops to 1.0400, that must hold since that was tested twice last week. If it breaks, additional support is at 1.0350, 1.0283, 1.0138 and .9976.

Resistance is at 1.0560, 1.0631 and 1.0676. It will need to get beyond those close together layers of resistance to prove there's energy for a larger move.

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.

Tuesday, July 20, 2010

USDCHF—broken short-term trend line

I have a buy order in at 1.0415. The low so far this morning has been 1.0480. On the hourly chart the pair has broken an upward price trend line (from mid-July so it's a short one) and the corresponding upward RSI trend line. So I'm thinking it might drop to the daily trend line from November, 2009 at 1.0415. The double test of 1.0400 last week is key support. If that breaks, additional support is at 1.0350, 1.0283, 1.0138 and .9976.

Resistance is at 1.0560, 1.0631 and 1.0676. So even if the pair rallies it will have a fight through those layers of resistance.

There's a lot of negative pressure on the USDCHF—lower lows the last four weeks on the weekly chart, etc. It's also plausible that it's beginning a wave 3 up. We'll just have to watch and wait.

Here's the 1-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—in channel

Still hanging in there slightly above its weekly 20 EMA (currently 1.5107) that served as strong resistance from April until recently. The pair is in an upward channel which looks overall corrective. Currently, its price action is not exactly strong and it's questionable whether it can again reach the channel top of 1.5550. Right now, cable is battling resistance made up of fib confluence and polarity at 1.5242. If it doesn't make it, additional support is at 1.5197 and 1.5141.

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—faltering and floundering

With the drop to 1.2840, the Euro posted a lower low on the hourly chart. It also made a hammer at that low so it's going to be important to see if it drops below that (bearish) or manages to stay above. There's support at 1.2768, 1.2683/60 and 1.2523.

There's not a lot to say about this pair that I haven't already said. The potential is still there technically for the pair to reach the 1.31 area. 1.3108 is 1.618 the length of the A wave; 1.3150 was the price target of the bull flag from the three-hour chart last week; 1.3094 was the spike high from May 10th. Until this pair overtakes those numbers it's a waste of time to talk about the price potential of the inverted head and shoulders.

Since the pair has broken uptrend lines in both price and RSI, I'll probably short on a rally.

Here's an 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.

AUDUSD—daily analysis

My short stopped at -40 pips. I then went long at .8710, took some partial profits at +60 pips and had a slight profit stop in place which was just hit on the spike down for +10 pips. The pair hit a high of .8814; the spike down was to .8714, just above yesterday's resistance level and it bounced from there.

Frankly, the markets are a little squirrely, a little directionless, which isn't unusual for summer or times of lower liquidity. It's times like these that make traders nervous—they feel they should be trading but the signals are unclear. Believe me, it's far better to stay out. You can't lose money being out of the market. Of course you can't make money either but if there's a lot of sideways movement going on then there's not a lot of profits out there anyway.

So, will the AUDUSD go up or down? Hah! I can make an argument either way. I'm not going to trade for the sake of trading and if I can't form a strong opinion or find a good entry then I will stay out.

I looked at the weekly chart yesterday and could make an argument from an Elliott Wave perspective that the pair was starting down along with the potential triple or double top. Both the triple and double top are only potentials at this point. People often forget they require confirmation. In the case of the triple top, the confirmation will be below .8066; for the double top it will be below.8316. Both of these are below the short term upward trend line on the weekly at .8460.

On the positive side, there was a confirmed double bottom with a price objective of .9040. Yet it can't seem to get past the resistance at .8860/80.

On the daily chart you can see two upward trend lines. The first one, in green, was broken in April at .9096; the second one, in blue, is currently at .8248. It's worth noting that .9096 isn't that far from the price target for the confirmed double bottom so it's possible there could be a retest of the trend line. On the other hand, a broken long-term trend line is a broken long-term trend line and shouldn't be taken lightly. Also interesting is the long-term divergence with RSI—higher prices but lower oscillator readings. This means weakness but you can go broke waiting for it as this chart shows.

I've outlined in grey a possible Gartley pattern formation. If this is true it would match the ideal if price was about.9096—hmm, where have we seen that number before? It's the price target for the confirmed double bottom.

My bias is short in this pair but there's no trade for me here yet. Let's see if price can stay above the hammer (on the hourly chart) low of .8714.

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.

Monday, July 19, 2010

EURUSD—update

My long stopped at -25 pips. I tried another which stopped at breakeven. At this point the Euro is somewhat paralyzed so I'll stay out until I get a clearer picture.

© 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—weekly chart

On the weekly chart, one can make a case that the pair is starting down. An Elliott wave count (EW) supports this as does the three tops (.8881, .8861, and .8873). This won't be a triple top until price breaks below .8066. If you try to look at it as a double top (.8861 and .8873) it won't be confirmed until .8316. The short term upward trend line on the weekly rectangle is at .8460. So, .8460, .8316 and .8066 are all interesting support levels. Resistance is obvious at .8861/81. A clear break above there would mean a long since the pair has never fulfilled its .9040 price objective from the confirmed double bottom.

I've gone short at .8680. Nearby resistance is .8719 so the stop can be tight. My trade doesn't show on the weekly chart because I use a different charting package for longer term charts.

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—weekly chart

A look at the weekly chart shows the pair nudging a downward trend line with a potential for dropping back to weekly support at 1.4313. The pair is above the 20 EMA (currently 1.5107) that was serving as strong resistance since April.

Historically, this pair has had a seasonal tendency to rise from June 28 to July 21. You can see on the charts that it has basically done so this year as well although you can also see how difficult this can be to trade. For example, if you'd bought at the open of June 28 at 1.5067 you'd have had to be able to stand the drawdown to 1.4874 on July 1. Then it moved basically sideways from July 2 to July 8. Finally, after another drop to 1.4949 on July 12th it started a short uptrend that has brought it to a high of 1.5472. So could you have made money using this seasonal tendency. Yes, but only as another piece of evidence. You'd still have had to practice good money management. In any case, July 21 is Wednesday.

Cable is faltering a bit this morning. 1.5230 , 1.5197 and 1.5141 are support levels so momentum behavior at those prices will be key to a decision of whether to buy.

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.

USDCHF—weekly chart

My short from 1.0436 stopped at breakeven and I'm just as happy to be out of it. My initial analysis last week of a long was probably correct. The pair tested 1.0400 twice last week and held. This was below what should have been strong support at 1.0422 but not egregiously so.

A drop to the short upward trend line at 1.0455 would be a nice entry point. It's at resistance now (1.0534) and just broke above a downtrend line from July 12 so it's possible. If it clears resistance then I may try a buy there as well. There will be additional resistance at 1.0586, 1.0631 and 1.0676. So there are layers of resistance fairly close together.

One thing to keep in mind is the weekly chart—there is strong negative pressure as indicated by the lower lows for the past four weeks along with the fact these were strong candles. If the pair breaks below 1.04 then 1.0350, 1.0283, 1.0138 and .9976 are all possible. However one can make a plausible case for the beginning of a wave 3 upwards. Will it begin today? Much will depend on overall attitude towards risk aversion.

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.

EURUSD—maybe it could get to 1.31

I was stopped out of my long at breakeven.

Overnight the Euro dropped to a low of 1.2871 which is about where I bought the other day. However I wasn't awake and so couldn't enter the trade. I have gone long at 1.2958 which is a little high for my taste. But there was a nice strong weekly close and the Euro has had five weeks of higher highs although it has been only two weeks of higher lows as well. However, the potential is still there technically for the pair to reach the 1.31 area. 1.3108 is 1.618 the length of the A wave; 1.3150 was the price target of the bull flag from the three-hour chart last week; 1.3094 was the spike high from May 10th. Then there's that inverted head and shoulders target hanging around at 1.3454. Juicy but still unlikely unless it clears the 1.31 area.

I've set my stop pretty tight on this one since it's possible it could drop to 1.2868, the bottom of its small channel. additional support is at 1.2768, 1.2683/60 (a price I'd like for going long) and 1.2523, a price at which the Euro bulls would probably give up.

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.