I don't usually post on summer Fridays. The liquidity is lower which can lead to extreme moves. In addition, this is the start of the USA holiday weekend so after NFP comes out I expect the market will be dead.
See you next week.
Friday, September 3, 2010
Thursday, September 2, 2010
GBPUSD—possible rally
I think there's a chance for another leg up and bought at 1.5358. In case I'm wrong I've already moved the stop to breakeven and took part of the position off the table for +40 pips.
Cable slightly dipped below last week's hammer low of 1.5371. That's bearish. However it's not much below (50 pips to 1.5326) and that's.382 of the 1.4228 to 1.5998 move. The fact that this held as support was positive. There's also support beneath here in the form of Fib confluence zones.
I wrote on Aug. 30th about the monthly symmetrical triangle with a potential of 1.6346 if it ran back up to the top. You could also look at the monthly action as having completed A and B of an ABC correction with C underway. On the daily chart, there's a bull pennant with a potential 672 pips from the breakout point (1.6164). All that's lovely to behold if price moves up but before one starts filling out deposit slips there is significant resistance in the 1.54 to 1.55 range with 10-, 50-, and 200-day SMAs ranging from 1.5428 to 1.5467. The top of the bull pennant is at 1.5480 and 1.5492 was yesterday's high. 1.5598 is the August 26th high.
The sentiment is largely bearish and the pair did break below its daily uptrend line as did RSI.
We'll have to see what happens. The markets are pretty dull. Fundamental data is sending mixed messages and NFP is coming out tomorrow. There probably won't be a lot of action.
Here's a 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.
Cable slightly dipped below last week's hammer low of 1.5371. That's bearish. However it's not much below (50 pips to 1.5326) and that's.382 of the 1.4228 to 1.5998 move. The fact that this held as support was positive. There's also support beneath here in the form of Fib confluence zones.
I wrote on Aug. 30th about the monthly symmetrical triangle with a potential of 1.6346 if it ran back up to the top. You could also look at the monthly action as having completed A and B of an ABC correction with C underway. On the daily chart, there's a bull pennant with a potential 672 pips from the breakout point (1.6164). All that's lovely to behold if price moves up but before one starts filling out deposit slips there is significant resistance in the 1.54 to 1.55 range with 10-, 50-, and 200-day SMAs ranging from 1.5428 to 1.5467. The top of the bull pennant is at 1.5480 and 1.5492 was yesterday's high. 1.5598 is the August 26th high.
The sentiment is largely bearish and the pair did break below its daily uptrend line as did RSI.
We'll have to see what happens. The markets are pretty dull. Fundamental data is sending mixed messages and NFP is coming out tomorrow. There probably won't be a lot of action.
Here's a 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.
EURUSD—dithering
The Euro has been in a narrow range of 1.2777 to 1.2856 for the past 25 hours.
Assuming we're in wave C as I explained yesterday morning, the potential price is between 1.2817 to 1.2935 (wave C = 1.618 * wave A). A price resistance exists between 1.2833 and 1.2922. The daily 20 SMA is at 1.2826; an uptrend line from June is at 1.2934. So there's reason to believe all of this will cap price action. If it doesn't, then additional resistance is at 1.3000 to 1.3122. The latter is the .382 retracement of the move down from last November. Finally, although I think a many would be stunned if price made it here, the next speed line and the .50 retracement level is around 1.35. I'd be shorting with both hands at that price. But more realistically, I'm still thinking about a possible short near 1.29.
Support is at 1.2777, 1.2663, 1.2626, and 1.2588.
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.
Assuming we're in wave C as I explained yesterday morning, the potential price is between 1.2817 to 1.2935 (wave C = 1.618 * wave A). A price resistance exists between 1.2833 and 1.2922. The daily 20 SMA is at 1.2826; an uptrend line from June is at 1.2934. So there's reason to believe all of this will cap price action. If it doesn't, then additional resistance is at 1.3000 to 1.3122. The latter is the .382 retracement of the move down from last November. Finally, although I think a many would be stunned if price made it here, the next speed line and the .50 retracement level is around 1.35. I'd be shorting with both hands at that price. But more realistically, I'm still thinking about a possible short near 1.29.
Support is at 1.2777, 1.2663, 1.2626, and 1.2588.
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.
Wednesday, September 1, 2010
GBPJPY—climbing
The remainder of my short profit-stopped at +20 pips. I bought this morning at 129.05 and have just taken partial profits at +160 pips. I don't normally write about the Guppy trades in this blog because of its tendency for fast moves and the pair is tricky to trade. In the last 24 hours I've been long, short, and now long again. I don't usually get in and out of trades so quickly as one can make more money waiting for a pair to begin trending. Very short-term trending is tough to trade and tough on the nerves. So, if you're reading this and you're new to trading it's probably best to avoid this pair. If you learn anything from my writing about this pair it should be that you need to be flexible to trade. Don’t let yourself be mired in your prior analysis. Changing your mind is OK as long as it's not an emotional reaction to price moving on the screen and is because additional analysis provides you with more information.
So why am I long? The move from 128.79 to 133.63 looked as though it was a three-wave correction. But because it rebelled against going lower at 128.66, I'm wondering if that move was wave A of a three-wave correction. If so, it may have completed wave B with the low of 128.66 yesterday and now be in wave C of an Elliott flat correction. All this is hypothesis. I can't prove it until after the fact (one of the reasons you can't really trade Elliott by itself).
But there were other reasons to try a long position. On the three-hour chart I have positive divergence (and the same is true on the one-hour chart). Now divergence has been common lately so I'm not overly excited by this. But it's one more clue.
Looking at the daily chart one can see a range from May and prices are near the bottom of the range. This leads me to believe I have support around 129. Yesterday I wrote about a support line at 129.05. So the chance to buy there this morning was irresistible since I could have a tight stop. On two of the last six daily candles, I have lower shadows which hints that lower prices are being rejected for now even within the overall downtrend.
Between 130.10 and 130.33 is price resistance and currently the pair has gotten above it. So now let's see what happens. Additional resistance is at 131.41, 132.03, 132.75, and 133.68 (daily 50 SMA). Support is at 130.10, 129.45, 129.05 and 128.66.
Remember, if my hypothesis is correct and this is wave C, it will head down again at some point.
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.
So why am I long? The move from 128.79 to 133.63 looked as though it was a three-wave correction. But because it rebelled against going lower at 128.66, I'm wondering if that move was wave A of a three-wave correction. If so, it may have completed wave B with the low of 128.66 yesterday and now be in wave C of an Elliott flat correction. All this is hypothesis. I can't prove it until after the fact (one of the reasons you can't really trade Elliott by itself).
But there were other reasons to try a long position. On the three-hour chart I have positive divergence (and the same is true on the one-hour chart). Now divergence has been common lately so I'm not overly excited by this. But it's one more clue.
Looking at the daily chart one can see a range from May and prices are near the bottom of the range. This leads me to believe I have support around 129. Yesterday I wrote about a support line at 129.05. So the chance to buy there this morning was irresistible since I could have a tight stop. On two of the last six daily candles, I have lower shadows which hints that lower prices are being rejected for now even within the overall downtrend.
Between 130.10 and 130.33 is price resistance and currently the pair has gotten above it. So now let's see what happens. Additional resistance is at 131.41, 132.03, 132.75, and 133.68 (daily 50 SMA). Support is at 130.10, 129.45, 129.05 and 128.66.
Remember, if my hypothesis is correct and this is wave C, it will head down again at some point.
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—climbing
The Euro exceeded 1.2775 (.382 retracement level of the move from 1.1892 to 1.3335) and also overtook the previous 1.2779 high. So far this morning it has reached 1.2846. So the possibility at least exists for it to continue up with resistance at 1.2900/25, and 1.3080.
I am looking to short rallies but the question is where to enter. If you assume that an A wave correction began at 1.2588 and ran to 1.2779 and the B wave dropped to 1.2626 then 1.2817 is the target if A=C and 1.2935 is the target if C is 1.618 times A. The 20 daily SMA is at 1.2846. The area between 1.2833 and 1.2922 (Aug. 20th and 18th highs) is polarity. On the hourly chart, RSI is already overbought. However people establishing positions at the beginning of the month could account for this. In any case, I'm watching price and momentum carefully and will likely short before or near 1.2900.
Should Euro begin to fall, support is at 1.2779, 1.2663, 1.2626, and 1.2588.
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.
I am looking to short rallies but the question is where to enter. If you assume that an A wave correction began at 1.2588 and ran to 1.2779 and the B wave dropped to 1.2626 then 1.2817 is the target if A=C and 1.2935 is the target if C is 1.618 times A. The 20 daily SMA is at 1.2846. The area between 1.2833 and 1.2922 (Aug. 20th and 18th highs) is polarity. On the hourly chart, RSI is already overbought. However people establishing positions at the beginning of the month could account for this. In any case, I'm watching price and momentum carefully and will likely short before or near 1.2900.
Should Euro begin to fall, support is at 1.2779, 1.2663, 1.2626, and 1.2588.
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.
AUDUSD—at resistance
First, am I bearish on the pair? Overall, yes. So why did I go long yesterday at .8913?
Because the chart said it was the right thing to do and while I'm somewhat distrustful of the late August market with its low liquidity, the chart always rules over personal opinion.
First, as I've written before, AUDUSD doesn't want to give up. Or, to be more precise, the bulls don't want to give up and they're fighting hard, just as the Euro bulls did at one point, to keep price from falling. There are many hints technically that they're going to lose this fight but as to when it will finally roll over for a good long drop down, who knows? The market can outlast you on personal opinion which is why I try to stay focused on my charts.
On the daily chart you could see several reasons for a buy.
There was the daily hammer that appeared 25 August. A hammer by itself after a decline is a clue but this one's lower shadow touched the .382 retracement of the prior move up as well as it being near an upward trend line. So it strengthened the hammer's signal. It signaled strong support. Now had the pair gone on to dip below that price, one would have had a powerful clue to go short. But it didn't. I bought because of this last Thursday. The 26th was a waffling kind of day and my long was taken out for only 30 pips profit before the pair moved on up on Friday. Monday, it fell back and yesterday it dropped a bit more, giving me an entry point. My actual entry point was something I decided on a shorter-term chart.
Another reason for the buy is the RSI level on the daily chart. It doesn't seem to drop very much and on the drop to .8770 it didn't fall below 43.89. This is not a bearish sign even if it's below 50. It's the lower end of what's acceptable—much below 40 and I'd become suspicious—but it is acceptable. Connie Brown writes about looking at RSI levels on pullbacks in her book Technical Analysis for the Trading Professional.
I am though, as I said above, bearish overall on this pair. As I also wrote on Monday, above .9020/30, the bears will probably start selling. That's one of the reasons you see it hesitating here at .9047. As a result, I just took partial profits for +135 pips. I'm not going to close the trade but if I weren't already long I'd try a short (of course you have to have a tight stop as the pair could go higher). I will be watching momentum and price behavior on the shorter time frames. For example, on the hourly chart the pair has just moved into overbought on RSI (over 70) but it has set up a positive divergence. Again, divergences are all over the place so it's not enough to change my mind about getting out of my trade but it's a clue. Again on the hourly chart, the most recently completed candle threw off a longish upper shadow hinting that higher prices are being rejected. And this is at resistance so it's another clue.
A resistance zone exists up to .9082. After that is .9222 and .9364. Support is at .8989/66, .8861 and .8770.
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.
Because the chart said it was the right thing to do and while I'm somewhat distrustful of the late August market with its low liquidity, the chart always rules over personal opinion.
First, as I've written before, AUDUSD doesn't want to give up. Or, to be more precise, the bulls don't want to give up and they're fighting hard, just as the Euro bulls did at one point, to keep price from falling. There are many hints technically that they're going to lose this fight but as to when it will finally roll over for a good long drop down, who knows? The market can outlast you on personal opinion which is why I try to stay focused on my charts.
On the daily chart you could see several reasons for a buy.
There was the daily hammer that appeared 25 August. A hammer by itself after a decline is a clue but this one's lower shadow touched the .382 retracement of the prior move up as well as it being near an upward trend line. So it strengthened the hammer's signal. It signaled strong support. Now had the pair gone on to dip below that price, one would have had a powerful clue to go short. But it didn't. I bought because of this last Thursday. The 26th was a waffling kind of day and my long was taken out for only 30 pips profit before the pair moved on up on Friday. Monday, it fell back and yesterday it dropped a bit more, giving me an entry point. My actual entry point was something I decided on a shorter-term chart.
Another reason for the buy is the RSI level on the daily chart. It doesn't seem to drop very much and on the drop to .8770 it didn't fall below 43.89. This is not a bearish sign even if it's below 50. It's the lower end of what's acceptable—much below 40 and I'd become suspicious—but it is acceptable. Connie Brown writes about looking at RSI levels on pullbacks in her book Technical Analysis for the Trading Professional.
I am though, as I said above, bearish overall on this pair. As I also wrote on Monday, above .9020/30, the bears will probably start selling. That's one of the reasons you see it hesitating here at .9047. As a result, I just took partial profits for +135 pips. I'm not going to close the trade but if I weren't already long I'd try a short (of course you have to have a tight stop as the pair could go higher). I will be watching momentum and price behavior on the shorter time frames. For example, on the hourly chart the pair has just moved into overbought on RSI (over 70) but it has set up a positive divergence. Again, divergences are all over the place so it's not enough to change my mind about getting out of my trade but it's a clue. Again on the hourly chart, the most recently completed candle threw off a longish upper shadow hinting that higher prices are being rejected. And this is at resistance so it's another clue.
A resistance zone exists up to .9082. After that is .9222 and .9364. Support is at .8989/66, .8861 and .8770.
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.
Tuesday, August 31, 2010
GBPJPY—update 2
I shorted at 129.77 and just took partial profits at +85 pips. The low so far is 128.83. The August 24th low of 128.79 may hold. Here's the hourly chart again and it's still showing positive divergence. I suspect there's going to be some bouncing around.
© 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.
© 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.
EURCHF—dropping
I'm still short from 1.3075 and have just taken another third of the trade off the table for +176 pips. The pair is headed down again, touching 1.2893. There's a fib projection at 1.2860 so maybe that will hold it. If not, there's always 1.2800. All that intervention from the SNB this past year for this? They might as well have saved their money.
There is positive divergence on the hourly chart so one needs to be careful. But there are divergences all over the place—a sign of a disorganized market and one that will probably straighten out in September after the US holiday.
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.
There is positive divergence on the hourly chart so one needs to be careful. But there are divergences all over the place—a sign of a disorganized market and one that will probably straighten out in September after the US holiday.
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.
GBPJPY—low of 129.40
The Guppy put in a low at 129.40 and looks as though it's trying to base on the hourly chart. This low is somewhat above the support line at 129.05. I bought a small position at 129.89, in part because of positive divergence on the hourly chart. It's running into resistance in the 130.37/54 area so I moved my stop to breakeven. This is too tight a stop for this pair but given that this could be a short-term correction with the C wave equal to the A wave and that this is a very illiquid market, it makes sense to me. I may stop and reverse. If it can make it through this resistance, additional resistance is at 132.03, 132.75, and 133.77 (daily 50 SMA). Support is at 129.45 and 128.79.
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.
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—monthly
The Swiss franc is blowing all the currencies away—the Euro, Cable, and the USD.
On the monthly USDCHF chart one can see prices coiling. This is not uncommon with other currencies and it's normal after major moves up or down. USDCHF is heading back to the bottom which isn't far away at 1.0020. There's support between here and there at 1.0130. This is a Fib confluence zone as well as the low for 2010. This year hasn't been good for this pair and it's possible it will break out downward with the symmetrical triangle being a continuation pattern.
But this is no sure thing and before anyone gets too cozy with the idea that the USD going down the tubes, there's positive divergence with RSI on the daily and three-hour charts. If it does rise it will run into substantial resistance—the 1.03/04 range and then the 1.06 to 1.0675 range. Above that is the top of the triangle around 1.15.
Here's the monthly 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.
On the monthly USDCHF chart one can see prices coiling. This is not uncommon with other currencies and it's normal after major moves up or down. USDCHF is heading back to the bottom which isn't far away at 1.0020. There's support between here and there at 1.0130. This is a Fib confluence zone as well as the low for 2010. This year hasn't been good for this pair and it's possible it will break out downward with the symmetrical triangle being a continuation pattern.
But this is no sure thing and before anyone gets too cozy with the idea that the USD going down the tubes, there's positive divergence with RSI on the daily and three-hour charts. If it does rise it will run into substantial resistance—the 1.03/04 range and then the 1.06 to 1.0675 range. Above that is the top of the triangle around 1.15.
Here's the monthly 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, August 30, 2010
GBPUSD—monthly
Cable is coiling inside a symmetrical triangle on the monthly chart. It's possible it could get as high as 1.6346 before it's over (but this is based on the monthly chart and won't happen immediately if it happens at all). The bottom of the triangle is in the 1.44 area.
One can trace out wave three's beginnings (currently in wave one of three) where wave three will eventually take price below the former low of 1.3655.
The monthly chart can't really be traded in the short term but as I set up for picking up trading in September when the markets move back to normal (whatever normal means), it's worth analyzing them. What I do with this information is use it to inform shorter term trades? For example, unlike some traders I will trade against the longer term trend. But if the longer term trend is long and I'm going short, I'm going to trail my stop more closely, possibly take smaller positions, and exercise more caution in general. This is in addition to wanting more than two pieces of evidence for the trade which I usually do insist upon regardless of overall trend. Three is ideal.
In the case of the cable, the longer term monthly trend is down since 2007. However, I may look for longs if the shorter term charts indicate interest in getting to 1.6346, the top of the triangle. Eventually, though, the biggest moves are going to come from prices dropping, i.e. 1.63 to 1.44. A trader won't normally catch all of that move but there's no reason not to catch some of it. If, on the other hand, prices break decisively above the triangle's 1.6346 (and decisive can be a tough call in the volatile spot market) then one would look to buy pullbacks. What if the pair drops to 1.44? It would be the 5th touch of the triangle and a common breakout point. I'd expect a break downward since symmetrical triangles are often continuation patterns. But fake-outs are common so I'd still exercise a great deal of caution.
Note that on the monthly chart, it's five candles up from the bottom to the first top, nine candles down and now what may be five candles up. So we're looking at a top within the next two months possibly. Once you start using numbers such as five and nine, the fib number crowd starts to tremble. In the end it's only one piece of information so I don't get overly excited about it. But I do count to get an idea of what might be the time frame I'm looking at. You can see how I can build a quarterly trading plan.
Long term support is 1.4229 and 1.3655. Long term resistance is 1.6879 and 1.7045.
Here's the monthly 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.
One can trace out wave three's beginnings (currently in wave one of three) where wave three will eventually take price below the former low of 1.3655.
The monthly chart can't really be traded in the short term but as I set up for picking up trading in September when the markets move back to normal (whatever normal means), it's worth analyzing them. What I do with this information is use it to inform shorter term trades? For example, unlike some traders I will trade against the longer term trend. But if the longer term trend is long and I'm going short, I'm going to trail my stop more closely, possibly take smaller positions, and exercise more caution in general. This is in addition to wanting more than two pieces of evidence for the trade which I usually do insist upon regardless of overall trend. Three is ideal.
In the case of the cable, the longer term monthly trend is down since 2007. However, I may look for longs if the shorter term charts indicate interest in getting to 1.6346, the top of the triangle. Eventually, though, the biggest moves are going to come from prices dropping, i.e. 1.63 to 1.44. A trader won't normally catch all of that move but there's no reason not to catch some of it. If, on the other hand, prices break decisively above the triangle's 1.6346 (and decisive can be a tough call in the volatile spot market) then one would look to buy pullbacks. What if the pair drops to 1.44? It would be the 5th touch of the triangle and a common breakout point. I'd expect a break downward since symmetrical triangles are often continuation patterns. But fake-outs are common so I'd still exercise a great deal of caution.
Note that on the monthly chart, it's five candles up from the bottom to the first top, nine candles down and now what may be five candles up. So we're looking at a top within the next two months possibly. Once you start using numbers such as five and nine, the fib number crowd starts to tremble. In the end it's only one piece of information so I don't get overly excited about it. But I do count to get an idea of what might be the time frame I'm looking at. You can see how I can build a quarterly trading plan.
Long term support is 1.4229 and 1.3655. Long term resistance is 1.6879 and 1.7045.
Here's the monthly 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.
EURCHF—dropping again
After my post last Thursday, I did go long at 1.3026 but did a stop and reverse this morning at 1.3075. So I made +49 pips which is not what I was expecting when I went long. I still believe the pair could rally to 1.33/1.34 but the sentiment is against it and the second rejection at 1.3145 is significant. As of now, it has broken both its short-term uptrend line and RSI has broken its uptrend line on the three-hour chart. Now it's back near its low—the daily hammer low from last week which is at 1.2970. A break of that could lead to 1.28. However, buyers may come in again and a rejection of that level could be encouraging. I just took partial profits at +80 pips if that happens.
Best thing in such a strong downtrend is to short the rallies. If you're going to go long, watch momentum on the short-term charts. But again, this is late August so traders need to be careful in this increasingly illiquid market.
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.
Best thing in such a strong downtrend is to short the rallies. If you're going to go long, watch momentum on the short-term charts. But again, this is late August so traders need to be careful in this increasingly illiquid market.
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.
AUDUSD—weekly chart
The remainder of my long profit-stopped out on Friday at +30 pips before then merrily heading up again. This happens. The pair then reached a high of .9032 before falling back today.
On the weekly chart AUDUSD formed a nice hammer with the dip to .8770 last week. That's now a very good support level--short-term uptrend lines, the .382 retracement level of the move up from .8067 on May 25 to the Aug. 6 high at .9222 at .8781, etc.
Above that is now other support—the 200 daily SMA is at .8938 and the 10 is at .8926. Staying above these will be bullish. However, if it rallies above .9020/30 again, the bears will probably sell. .9032, .9050 and .9082 creates quite a resistance zone. There are, though, downtrend lines above that, up to .9326. I doubt we'll see them touched but who really knows.
Here's the weekly chart:
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.
On the weekly chart AUDUSD formed a nice hammer with the dip to .8770 last week. That's now a very good support level--short-term uptrend lines, the .382 retracement level of the move up from .8067 on May 25 to the Aug. 6 high at .9222 at .8781, etc.
Above that is now other support—the 200 daily SMA is at .8938 and the 10 is at .8926. Staying above these will be bullish. However, if it rallies above .9020/30 again, the bears will probably sell. .9032, .9050 and .9082 creates quite a resistance zone. There are, though, downtrend lines above that, up to .9326. I doubt we'll see them touched but who really knows.
Here's the weekly chart:
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—near short-term support
Euro touched 1.2779 Friday before falling to what seems to be the bottom of a small range with support in 1.2667 to low 1.27 area. I wrote last week that only if the pair breaks above 1.2775 can one expect more upward price probes, possibly to 1.28 or 1.29. It hasn't happened yet. Since 1.2775 was the .382 retracement level (1.1892 to 1.3335) the failure on Friday would have encouraged me to go short had I been trading.
The low on Friday was 1.2677. On the hourly chart the low was a hammer candle so it should serve as support. Just below is the Thursday low of 1.2667 and just above is the short-term uptrend line of 1.2687. Also worth considering are the daily simple moving averages. The 10 is 1.2747; the 50 is 1.2772; the 100 is at 1.2720.
A small long near 1.2675 is possible but where will the stop be? Below 1.2588 is safest but that's a bit rich given the illiquid market. If you don't mind losing it in a downdraft, you could place it below 1.2650. Safer would be a short on a rally. However, this is likely to be a slow week with the US moving towards its holiday weekend so the best position might be no position at all.
© 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.
The low on Friday was 1.2677. On the hourly chart the low was a hammer candle so it should serve as support. Just below is the Thursday low of 1.2667 and just above is the short-term uptrend line of 1.2687. Also worth considering are the daily simple moving averages. The 10 is 1.2747; the 50 is 1.2772; the 100 is at 1.2720.
A small long near 1.2675 is possible but where will the stop be? Below 1.2588 is safest but that's a bit rich given the illiquid market. If you don't mind losing it in a downdraft, you could place it below 1.2650. Safer would be a short on a rally. However, this is likely to be a slow week with the US moving towards its holiday weekend so the best position might be no position at all.
© 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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