Euro bounced around quite a bit this morning. After NFP it leapt to a high of 1.3984. Then it sank to 1.3833. If you could catch the short you would have made a little money but I'm not keen on trading around news events. Now it is trying again, reaching 1.3945 before faltering.
So the question is—will she climb or will she drop? Nobody can definitively answer that but trading is about probability. Here is what supports the argument for a drop:
1) The angle of the recent ascent is too steep to be maintained.
2) The pair is very overbought
3) It's at the top of what is a reasonable Elliott Wave count for a correction
4) Yesterday was a doji hints the uptrend is stalling
If prices start to edge below 1.3820 then there will probably be a deeper correction and perhaps the renewal of the overall downtrend. A correction could mean only a consolidation. Next week should bring in more information. Overall, though, I'm still leaning towards short entries. However the charts can change my mind.
© 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.
Friday, October 8, 2010
AUDUSD—update
I was profit-stopped at +20 pips in the volatility around the NFP release. I've gone long again at .9782 but have already moved my stop to breakeven.
The uselessness of analysts
I did a word cloud of several so-called "analysts" opinions found on popular Forex sites about the upcoming NFP. I wanted to post it just prior the release. It's notable in that the picture shows that the words used most often (denoted by size) contain absolutely no word of value.
EURJPY—stalled
I'm still short from 115.30 and took partial profits at +100 pips. The pair moved to a low of 114.20 but has stalled. Nothing is doing much now ahead of NFP but we'll see where it goes after that.
© 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.
AUDUSD—almost…
With its high yesterday of .9917, the pair almost achieved parity. Last time the pair was this high was August of 1982 when the high was .9965 and it was on the way down from being over parity. (In 1983, Australia decided to "float" its currency.)
In any case, as you'd expect with profit-taking, the pair fell back to a low of .9709 earlier today. The pair looks as though it's trying to base here. It's a parity zone and about the .618 retracement of the most recent move up from .9542. I'd like to see it correct even lower but I took a long position at .9735. Parity is too much of a magnet for traders, especially with USD weakness. Once it gets there, if it does, it's doubtful it will move much above it but I'm not going to spend time fortune telling.
If this trade stops out, next support would be the week's low at .9542 and if that fails then .9462 and .9396 (.382 of the move up from .8770) will probably hold. I wouldn't be too surprised if it does stop out. Yesterday was a doji and with the move down today, it could be an evening star formation. If it does, then lower lows than those mentioned as support are probably in store.
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.
In any case, as you'd expect with profit-taking, the pair fell back to a low of .9709 earlier today. The pair looks as though it's trying to base here. It's a parity zone and about the .618 retracement of the most recent move up from .9542. I'd like to see it correct even lower but I took a long position at .9735. Parity is too much of a magnet for traders, especially with USD weakness. Once it gets there, if it does, it's doubtful it will move much above it but I'm not going to spend time fortune telling.
If this trade stops out, next support would be the week's low at .9542 and if that fails then .9462 and .9396 (.382 of the move up from .8770) will probably hold. I wouldn't be too surprised if it does stop out. Yesterday was a doji and with the move down today, it could be an evening star formation. If it does, then lower lows than those mentioned as support are probably in store.
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.
Thursday, October 7, 2010
EURJPY—moving down
I blogged last week that this pair was a potential sell and on Friday wrote that, "With a touch of 1.1452 this morning, the pair is getting very near to the potential selling price of 114.74 I've been blogging about this week….115.14 is the upper channel line and there is fib confluence and polarity at 116.63. So if price gets through the 114.74 then it might be worth holding off a bit."
On Tuesday I shorted at 115.30 with a very tight stop and it has finally started to move down, hitting a low of 114.60 this morning. However now there's a need for caution because it could only be retesting it's former resistance of 114.74—overshooting a bit is common in the Forex spot market. I've moved my stop to breakeven so I have no risk but I'm not going to take partial profits at this point. If it heads up again I may do so but in my mind the potential is so great that I want to leave it alone. That potential is 1.0986 (50% of the most recent move up). Support is at 1.1454, 1.1376, and 1.1298. If the pair rallies well I will probably go long around 1.1530.
© 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 Tuesday I shorted at 115.30 with a very tight stop and it has finally started to move down, hitting a low of 114.60 this morning. However now there's a need for caution because it could only be retesting it's former resistance of 114.74—overshooting a bit is common in the Forex spot market. I've moved my stop to breakeven so I have no risk but I'm not going to take partial profits at this point. If it heads up again I may do so but in my mind the potential is so great that I want to leave it alone. That potential is 1.0986 (50% of the most recent move up). Support is at 1.1454, 1.1376, and 1.1298. If the pair rallies well I will probably go long around 1.1530.
© 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—hit 1.6018
I don’t have time to blog in depth about this pair this morning but my long position from 1.5862 took profits when it touched 1.60 earlier for +138 pips. Had I been paying closer attention I might have moved the take profit target but I wasn't and I didn’t. However, I think this pair, too, is due for a correction. Let's see what happens. Its high this morning was 1.6018 before it fell back; it may make another try. If it overcomes this price then it may indeed be on target for 1.6458, 1.6878, and 1.7000. Support is at 1.5840, 1.5750, 1.5680/70, and 1.5504. Below that would probably mean the overall downtrend was resuming but there will be signs before it gets there.
© 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.
EURUSD—Maybe it's a bat
Euro almost made it to 1.40, reaching a high of 1.3997 so far this morning.
I wanted to look at Euro in a different way since by most of my usual approaches—fib retracement, Elliott Wave, simple common sense—it's overdue for a correction but it doesn't seem to be yet happening.
One way to look at it is from the point of view of harmonic patterns. When I do so there are a couple of possibilities. One that would have the Euro bulls dancing the Macarena is the bat pattern. With this, the potential price for this last leg is 1.4771.
The bat pattern was described by Scott Carney in 2001. In a bearish market it's a "W" shape. Each point is labeled with a letter. In this case the top of the W is X, the bottom of the first leg is A, the second leg up is B, etc. For the Euro the first leg would be from 1.5144 to 1.1876. This is known as the XA leg (X=1.5144).
With harmonic patterns there are relationships for retracements that adhere to Fibonacci relationships. For the bat, the defining one is that the final point D, must be a .886 of the XA relationship. This is the 1.4771 I mentioned above or .886 of the move from 1.5144 to 1.1876. The point where B retraces to must be less than .618 of the XA leg and it's preferable it is between .382 and .5. Usually there is a 1.27 relationship of the CD to the AB calculation. Finally, there's a minimum 1.618 projection of the BC length.
Below is what this looks like for the Euro.
Do I believe this? Oh, I don't know. As I said above, common sense says the Euro should be correcting and I expect it will. But the point is, where? If it gets much above 1.4050, thus blowing those Elliott predictors away, then maybe this is where it will go. But I'll probably short at or before 1.4050.
© 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 wanted to look at Euro in a different way since by most of my usual approaches—fib retracement, Elliott Wave, simple common sense—it's overdue for a correction but it doesn't seem to be yet happening.
One way to look at it is from the point of view of harmonic patterns. When I do so there are a couple of possibilities. One that would have the Euro bulls dancing the Macarena is the bat pattern. With this, the potential price for this last leg is 1.4771.
The bat pattern was described by Scott Carney in 2001. In a bearish market it's a "W" shape. Each point is labeled with a letter. In this case the top of the W is X, the bottom of the first leg is A, the second leg up is B, etc. For the Euro the first leg would be from 1.5144 to 1.1876. This is known as the XA leg (X=1.5144).
With harmonic patterns there are relationships for retracements that adhere to Fibonacci relationships. For the bat, the defining one is that the final point D, must be a .886 of the XA relationship. This is the 1.4771 I mentioned above or .886 of the move from 1.5144 to 1.1876. The point where B retraces to must be less than .618 of the XA leg and it's preferable it is between .382 and .5. Usually there is a 1.27 relationship of the CD to the AB calculation. Finally, there's a minimum 1.618 projection of the BC length.
Below is what this looks like for the Euro.
Do I believe this? Oh, I don't know. As I said above, common sense says the Euro should be correcting and I expect it will. But the point is, where? If it gets much above 1.4050, thus blowing those Elliott predictors away, then maybe this is where it will go. But I'll probably short at or before 1.4050.
© 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—Grim lower lows
Much is being made of the lows of this pair and it has dipped lower than at any time in at least the last 30 years which is as far as my charts go back. The prior low was .9637 in March '08 and the overnight low was .9555. That's pretty grim. Not so much talked about is that both Euro and Cable have also seen historic lows against the Swiss franc. There has been a steady downward march for years. It's all paper money—fiat money as the extremists keep bleating about—but the Swissy has some backing in gold. So, for that matter, does the Euro so why such historic lows? In any case, nothing goes straight down forever although, unlike Euro, our government apparently doesn't give a hoot about our dollar and there won't be intervention.
The red line on the monthly chart below suggest there could be lower lows to a downward channel line. The blue converging lines, though, suggest other things. It's a declining wedge and while this can be a continuation pattern, prices often break upward since the steepest angle is usually the least sustainable. (There are lots of steep angles around these days—check out Euro's rising wedge or ending diagonal). This could also be an Elliott ending diagonal which would imply a sharp, upward movement. Regardless of which interpretation you give it, there lower boundary hints there won't be much in the way of lows beneath 95 at least in the near term.
If I want to be grim about it, yes, there could be a further break down to 90. No doubt that would provoke the strong and mighty "We support a strong dollar" blah-blah which has continued from the Bush administration (didn't we change parties somewhere? Oh, right, it's still the same old Wall Street crowd running Treasury). But I wouldn't go short at this point thinking that's going to happen. Usually you get a bounce somewhere. And when everyone is saying something is doomed that's often the time markets like to turn.
Bottom line—be careful here. If you want to risk a long, have tight stops below 95. A short also needs tight stops because it could be a bear trap.
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.
The red line on the monthly chart below suggest there could be lower lows to a downward channel line. The blue converging lines, though, suggest other things. It's a declining wedge and while this can be a continuation pattern, prices often break upward since the steepest angle is usually the least sustainable. (There are lots of steep angles around these days—check out Euro's rising wedge or ending diagonal). This could also be an Elliott ending diagonal which would imply a sharp, upward movement. Regardless of which interpretation you give it, there lower boundary hints there won't be much in the way of lows beneath 95 at least in the near term.
If I want to be grim about it, yes, there could be a further break down to 90. No doubt that would provoke the strong and mighty "We support a strong dollar" blah-blah which has continued from the Bush administration (didn't we change parties somewhere? Oh, right, it's still the same old Wall Street crowd running Treasury). But I wouldn't go short at this point thinking that's going to happen. Usually you get a bounce somewhere. And when everyone is saying something is doomed that's often the time markets like to turn.
Bottom line—be careful here. If you want to risk a long, have tight stops below 95. A short also needs tight stops because it could be a bear trap.
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.
EURGBP—testing former resistance
When last I wrote about this pair a week ago, it had met my price target and had a small pullback to .8662 after stumbling at good resistance of .8740. Since then it has rallied, reaching a high of .8805 this morning, no doubt helped by Euro's recent strength. This is near the May high of .8808.
Various price calculations I've made show this pair could get into the .9000/.9100 area without too much effort whereupon it would be forced back by strong resistance from Nov. '09 and Mar. '10 highs of .9150. Resistance before it gets there is at .8862/80 and .8937 (monthly downtrend line from .9805 high in 2008). Going long now requires waiting for a retracement. I think one may happen—price has moved a bit ahead of time since the .8068 low—and it is at the May high.
Support levels are at .8740, .8700/8690 (psychological and 10/6 low), .8647/30 (the daily 10 SMA and price support), .8467 and .8360 (daily 50 SMA). It's currently testing .8734 (former resistance) so it may be a buy opportunity but I'd prefer a bigger dip. Price below .8360 hints at lower lows but I'm not sure we'll see that.
© 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.
Various price calculations I've made show this pair could get into the .9000/.9100 area without too much effort whereupon it would be forced back by strong resistance from Nov. '09 and Mar. '10 highs of .9150. Resistance before it gets there is at .8862/80 and .8937 (monthly downtrend line from .9805 high in 2008). Going long now requires waiting for a retracement. I think one may happen—price has moved a bit ahead of time since the .8068 low—and it is at the May high.
Support levels are at .8740, .8700/8690 (psychological and 10/6 low), .8647/30 (the daily 10 SMA and price support), .8467 and .8360 (daily 50 SMA). It's currently testing .8734 (former resistance) so it may be a buy opportunity but I'd prefer a bigger dip. Price below .8360 hints at lower lows but I'm not sure we'll see that.
© 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, October 6, 2010
EURUSD—not a lot more to say
There's not a lot more to say than what I've been saying over the last week or so. The pair keeps trying to edge up but there are many who expect it to reverse. I believe 1.40 is possible but there's more resistance at 1.3893, the .618 retracement of the move down from last November. It's overbought in several time frames. If it is going to blow past the 1.40 mark it needs a major correction to do so. A move down to the 1.3335/1.3450 level would provide that. A move below 1.3799 would hint at that. If it's not going to continue to climb—and nobody can deny the ending diagonal on the daily chart plus the fact that the currency is pretty crummy fundamentally (although what does that have to do with anything?), then it will probably begin to move down rather sharply at some point. Anyone long would want to their profits locked in and I would hope people aren't adding longs at this point. For myself, I continue to look for a good short entry. Lots of eyes watching this pair as always and that too is a problem. A watched pot never boils it seems. But of course it does eventually.
© 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.
GBPUSD—slogging along
It's one of those times I'm glad I took my 70 pips on part of the position yesterday. After that, the pair declined and took out the remainder of the position for +10 pips. So 1.5940 was the high, not that far from the 1.5995 prior high that many have been eyeing. This climb, if it's to be a climb, is a long, hard slog.
There's still a lot to like about the pair. Last Friday's move down to 1.5670 formed a hammer and led to a nice rise. I still have a daily bull flag (flag and target is the dashed line on the daily chart below). That target is almost intersecting a rectangular, up-sloping channel line. Price action this morning appears to be a retest of the diamond pattern (see yesterday's blog) breakout point although I'd have liked to see a bit more downside. One can also make a case, particularly on the weekly chart (not shown) that it's still within an Elliott Wave (EW) correction. I also have price targets from my point and figure charts that are higher. As a result of all this, I took another long position at 1.5862. If it can overcome the immediate resistance, one might see highs of 1.6458, 1.6870, and 1.7000.
If the pair fails again as it approaches 1.5995 (or if the 1.5940 was the high and it falls from there) then once it goes below 1.5297, it will confirm a double top. No double or triple top or head and shoulders pattern is confirmed before price breaches a high or low within the potential pattern. There are a lot of pips between here. Despite what I believe are the bullish reasons I listed above, there are several reasons the pair may fail. For one thing, the 1.5940/95 area is tough resistance with a Fib retracement level, price resistance and a fib confluence zone. Then too, the overall trend is down. So, stops need to be tight. Support is at 1.5833/16 (today's low and the 10-Day SMA) 1.5750, 1.5680/70, 1.5549, and 1.5349. As mentioned above, if the pair sees 1.5297 then it opens the doors to lows down to 1.50 and beyond.
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.
There's still a lot to like about the pair. Last Friday's move down to 1.5670 formed a hammer and led to a nice rise. I still have a daily bull flag (flag and target is the dashed line on the daily chart below). That target is almost intersecting a rectangular, up-sloping channel line. Price action this morning appears to be a retest of the diamond pattern (see yesterday's blog) breakout point although I'd have liked to see a bit more downside. One can also make a case, particularly on the weekly chart (not shown) that it's still within an Elliott Wave (EW) correction. I also have price targets from my point and figure charts that are higher. As a result of all this, I took another long position at 1.5862. If it can overcome the immediate resistance, one might see highs of 1.6458, 1.6870, and 1.7000.
If the pair fails again as it approaches 1.5995 (or if the 1.5940 was the high and it falls from there) then once it goes below 1.5297, it will confirm a double top. No double or triple top or head and shoulders pattern is confirmed before price breaches a high or low within the potential pattern. There are a lot of pips between here. Despite what I believe are the bullish reasons I listed above, there are several reasons the pair may fail. For one thing, the 1.5940/95 area is tough resistance with a Fib retracement level, price resistance and a fib confluence zone. Then too, the overall trend is down. So, stops need to be tight. Support is at 1.5833/16 (today's low and the 10-Day SMA) 1.5750, 1.5680/70, 1.5549, and 1.5349. As mentioned above, if the pair sees 1.5297 then it opens the doors to lows down to 1.50 and beyond.
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—New high
My long from .9603 hit its profit target earlier at .9774 for +171 pips. Yesterday when I took the trade, I had estimated the top of the channel at .9790 and had set the target just under it. Had I been awake and trading earlier, I probably would have taken part of the trade off the table and moved the target higher since this pair doesn't seem to want to quit. I wasn't.
Now the issue is whether to enter another long. The 2008 target of .9851 is a juicy one Supporting this price target is that the top of the channel on the weekly chart is .9850 or so. At this point, though, I need to see some sort of pullback. This pair has had six up weeks. Yesterday, the low of .9542 dipped slightly below last week's low which is not a good sign. It doesn't mean it can't continue to climb—perhaps even to parity—but it does mean that there are hints it wants to take a rest, retrace a bit, gain some energy.
One nearby possible support for a long is .9694. I'd like to see it do better than this though, perhaps down to yesterday's .9542/20 (50% of the move from .9331 to .9750 and the 20 daily SMA) for a retest. Beneath that is .9462, .9396 (.382 of move up from .8770), 9357, and .9281/70. Below that would signal possible weakness down to .8770.
Below is a three-hour, three-box, closing price point and figure (P&F) chart for AUDUSD. I've written before about them. I keep both a daily and three-hour one for the pairs I track. I like them because they remove time from the equation and show only supply and demand. They don't change unless price changes by a predetermined amount. X's are up columns meaning price is increasing; 0's are down columns. If a price is steadily moving up then the X column becomes higher by adding another X. In this case, each X is worth 30 pips so there has to be a closing price at least 30 pips higher than the prior one. If closing price decreases by 90 pips (three boxes) then a column of 0's begins showing the price decline.
As you can see from the chart below, the AUDUSD has many long columns of X's. Yesterday was the first pullback in a while and it didn't come close to getting to the 45° internal trend line that should provide support. Only if it gets down below .9270 will I get a solid sell signal from this chart. Furthermore, it has exceeded the price target I calculated some time ago of .9630. My daily chart has price targets of .9728 and it has exceeded that as well.
The bottom line here is that while I believe AUDUSD may move higher, I'd like to see a better entry point for a long position.
Here's the P&F, 3-hour, 3-box, closing price 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.
Now the issue is whether to enter another long. The 2008 target of .9851 is a juicy one Supporting this price target is that the top of the channel on the weekly chart is .9850 or so. At this point, though, I need to see some sort of pullback. This pair has had six up weeks. Yesterday, the low of .9542 dipped slightly below last week's low which is not a good sign. It doesn't mean it can't continue to climb—perhaps even to parity—but it does mean that there are hints it wants to take a rest, retrace a bit, gain some energy.
One nearby possible support for a long is .9694. I'd like to see it do better than this though, perhaps down to yesterday's .9542/20 (50% of the move from .9331 to .9750 and the 20 daily SMA) for a retest. Beneath that is .9462, .9396 (.382 of move up from .8770), 9357, and .9281/70. Below that would signal possible weakness down to .8770.
Below is a three-hour, three-box, closing price point and figure (P&F) chart for AUDUSD. I've written before about them. I keep both a daily and three-hour one for the pairs I track. I like them because they remove time from the equation and show only supply and demand. They don't change unless price changes by a predetermined amount. X's are up columns meaning price is increasing; 0's are down columns. If a price is steadily moving up then the X column becomes higher by adding another X. In this case, each X is worth 30 pips so there has to be a closing price at least 30 pips higher than the prior one. If closing price decreases by 90 pips (three boxes) then a column of 0's begins showing the price decline.
As you can see from the chart below, the AUDUSD has many long columns of X's. Yesterday was the first pullback in a while and it didn't come close to getting to the 45° internal trend line that should provide support. Only if it gets down below .9270 will I get a solid sell signal from this chart. Furthermore, it has exceeded the price target I calculated some time ago of .9630. My daily chart has price targets of .9728 and it has exceeded that as well.
The bottom line here is that while I believe AUDUSD may move higher, I'd like to see a better entry point for a long position.
Here's the P&F, 3-hour, 3-box, closing price 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, October 5, 2010
AUDUSD—Update
It looks as though there's going to be another challenge at the .9750 level. The pair has bounced vigorously on the hourly chart and the top of the channel is .9790. My new long is from .9603. I was persuaded by the fact that the .9542 low was 50% of the move from .9331 to .9750. However, I don't think this is a done deal by any means and I'm taking partial profits at +95 pips.
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.
EURUSD—update
Stopped at -42 pips. High so far is 1.3840 with negative divergence on the three- and one-hour charts. On the lower time frame charts one can see it broke above a triangle. Lots of eyes watching this.
© 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.
USDCHF—how low can it go?
In March, 2008, this pair's low was .9637. The low so far today has been .9657. This is near major support and I'd expect a bounce. The question is how high would that bounce go? .9844/79 is the first possibility; parity is the second.
The troubling thing about the weekly chart is that one can make a case for an Elliott Wave zigzag correction (it meets all the rules). I've marked this in red as Alt: A, etc. So what would it mean? Well, it's easy to say lower, much lower, lows ahead. However it's not quite time to throw out the original count as it's also possible to interpret the entire move as a wave two (2) that is going to retrace all of wave one (down to .9637) before resuming wave three. Interesting times.
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.
The troubling thing about the weekly chart is that one can make a case for an Elliott Wave zigzag correction (it meets all the rules). I've marked this in red as Alt: A, etc. So what would it mean? Well, it's easy to say lower, much lower, lows ahead. However it's not quite time to throw out the original count as it's also possible to interpret the entire move as a wave two (2) that is going to retrace all of wave one (down to .9637) before resuming wave three. Interesting times.
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—consolidating
I bought yesterday at 1.5825 after decent momentum and a nice hammer formed at support on the three-hour chart. This was after last Friday's move down to 1.5670 which also formed a hammer and led to a nice rise. I was comfortable going back to my original analysis. As I wrote last week, "The drop took place on the last day of the month—it might only mean there was profit-taking in play….I still have a daily bull flag I'm playing off of and this is likely an EW C wave that isn't quite complete. I also have price targets from my point and figure charts that are higher. All those things looks bullish."
Now of course, with respective highs of 1.5923 and 1.5914 during the last 24 hours, I'm going to have to see if 1.5998 (early August price) will still cap it. As a result I took partial profits earlier this morning of +70 pips. If it can't overcome 1.5995 then support is at 1.5750, 1.5670, 1.5549, and 1.5349.
I think there won't be long to wait before an answer of some sort. On the three-hour chart you can see a rough diamond pattern. This is consolidation before a bigger move. As Bulkowski explains in his Encyclopedia of Chart Patterns (2005) a break from a diamond can be a fast-moving one. The problem here if it breaks upward (which could be expected when a diamond forms after an uptrend) is that 1.5998 resistance. But if it can overcome that resistance, 1.64 is possible.
© 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.
Now of course, with respective highs of 1.5923 and 1.5914 during the last 24 hours, I'm going to have to see if 1.5998 (early August price) will still cap it. As a result I took partial profits earlier this morning of +70 pips. If it can't overcome 1.5995 then support is at 1.5750, 1.5670, 1.5549, and 1.5349.
I think there won't be long to wait before an answer of some sort. On the three-hour chart you can see a rough diamond pattern. This is consolidation before a bigger move. As Bulkowski explains in his Encyclopedia of Chart Patterns (2005) a break from a diamond can be a fast-moving one. The problem here if it breaks upward (which could be expected when a diamond forms after an uptrend) is that 1.5998 resistance. But if it can overcome that resistance, 1.64 is possible.
© 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.
EURGBP—constrained by cable
Since I went long yesterday the pair has gone essentially nowhere, no doubt held back by Cable. I closed my long this morning for -3 pips since I think the picture is somewhat muddied. It dropped below what looked like .8662 support. No reason for a chart as there isn't much to show until it either moves above .8740 or drops to .8521.
© 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.
EURUSD—doing its time
Will it drop or will it rise? This is the big question while the Euro hangs around doing its time in a fairly narrow range. Yes, it probed 1.3804 last Friday but it hasn't been back there yet, managing only two weak touches of 1.3784. On the other hand, it isn't exactly plummeting downwards.
The evidence is lining up for Euro to drop. The pair is at price resistance (1.3818/38 are Feb./Mar. highs). There are the Elliott Wave followers saying it's at an end of a wave two correction, there's a contrarian point of view that the Daily Sentiment Index is over 90% bulls, there are perma-bears who insist that it must drop to parity. But the fact is that the pair keeps hovering about, seemingly unable to let go for this projected long drop down.
As I wrote at the end of September, "there's a polarity zone that extends up to 1.3850…" and 1.3850 "is approximately 50% of the move from the 2002 low to the 2008 high." But I also suggested higher targets when I wrote, " Using EW theory, it's not unusual for wave C to be the same length as A. This would imply a top of 1.4030. Short covering if the pair got above 1.3850 would fuel this kind of rise." And then of course there are the perma-bulls who somehow still expect it to become the world's most expensive currency for us schlubs who hold dollars.
The weight of evidence is on the side of the shorts. The issue, for those who want to short, is the entry point. To be safest from being stopped out the stop must be above 1.40. This is far away from the current 1.3771 if you're a small trader. A less painful stop is 1.3865 which is still a reach for some. You can also place a stop above 1.3810—not bad at all if you want to go short. If you get stopped out wait for a point a little further on up the road. Certainly if Euro gets to 1.4030, put on your smiling skull ring. (Further on up the road? Smiling skull ring? I've been listening to Bruce Springsteen lately.)
I shorted at 1.3766 earlier this morning. 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.
The evidence is lining up for Euro to drop. The pair is at price resistance (1.3818/38 are Feb./Mar. highs). There are the Elliott Wave followers saying it's at an end of a wave two correction, there's a contrarian point of view that the Daily Sentiment Index is over 90% bulls, there are perma-bears who insist that it must drop to parity. But the fact is that the pair keeps hovering about, seemingly unable to let go for this projected long drop down.
As I wrote at the end of September, "there's a polarity zone that extends up to 1.3850…" and 1.3850 "is approximately 50% of the move from the 2002 low to the 2008 high." But I also suggested higher targets when I wrote, " Using EW theory, it's not unusual for wave C to be the same length as A. This would imply a top of 1.4030. Short covering if the pair got above 1.3850 would fuel this kind of rise." And then of course there are the perma-bulls who somehow still expect it to become the world's most expensive currency for us schlubs who hold dollars.
The weight of evidence is on the side of the shorts. The issue, for those who want to short, is the entry point. To be safest from being stopped out the stop must be above 1.40. This is far away from the current 1.3771 if you're a small trader. A less painful stop is 1.3865 which is still a reach for some. You can also place a stop above 1.3810—not bad at all if you want to go short. If you get stopped out wait for a point a little further on up the road. Certainly if Euro gets to 1.4030, put on your smiling skull ring. (Further on up the road? Smiling skull ring? I've been listening to Bruce Springsteen lately.)
I shorted at 1.3766 earlier this morning. 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—Correcting
AUDUSD finally had a little drop overnight. At .9556 it took out the remainder of my long from .8913 for a profit of 643 pips. So far the pair has dropped to .9542 from a high Friday of .9750. As I wrote yesterday, the pair has been in a range between .9625 and .9750 since Sept. 29th. So this is the first probe below this range and below the Sept. 28th low of .9560.
I'd expect to see support at .9417/07, then 9377, the .382 retracement of the advance from .8770. This zone makes for strong support. Additional support is at .9330, .9213 and .9126.
The three-hour candle that is currently forming is an outside candle (price higher and lower than the prior candle). So there's some indecision out there. I will most likely look at any dip as a buying opportunity but I'll keep studying the chart. Ideally it would get lower than where it is now.
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.
I'd expect to see support at .9417/07, then 9377, the .382 retracement of the advance from .8770. This zone makes for strong support. Additional support is at .9330, .9213 and .9126.
The three-hour candle that is currently forming is an outside candle (price higher and lower than the prior candle). So there's some indecision out there. I will most likely look at any dip as a buying opportunity but I'll keep studying the chart. Ideally it would get lower than where it is now.
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.
Monday, October 4, 2010
AUDUSD—6 solid weeks
I'm still long from .8913. The pair completed the sixth week of higher highs and five consecutive weeks of higher lows. Sounds like an uptrend, right, at least in the intermediate sense? On the weekly chart below, the cause for concern is RSI. There's negative divergence with this uptrend in price. The price has been stuck in a range between .9625 and .9750 since Sept. 29th. This is either consolidation prior to the long-awaited push back to the 2008 .9851 high or it's something that price will eventually break below. If it does do this then the pair should find good support at .9330. Below that is .9213 and .9126. A drop below that would be alarming to bulls.
Here's the weekly chart. My trades don't show on these longer-term charts because I use a different charting package.
© 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 weekly chart. My trades don't show on these longer-term charts because I use a different charting package.
© 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—fighting it out
My short from 1.3731 stopped out at 1.3780. (-49 pips). Euro probed 1.3804 before falling back to a low of 1.3667 this morning. It's tempting to say I should have had a higher stop since I wrote it could move into the 1.38 level but that was too much risk.
Not much has changed since I blogged on Friday. I said then that there was a risk for a move to the 1.3860 level and that's still a possibility. From a bearish point of view, I don't like the way prices are holding with dropping RSI on the hourly chart. It definitely doesn't want to fall which means that the bulls and bears are locked in battle because there are many who want/expect it to fall. The pair is at tough resistance (price and fib retracement) and from any reasonable EW point of view we're at the end of a correction.
My tendency is to short but we'll see. The chart will be clearer as we go along.
No chart until there's something more definitive to show.
© 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.
Not much has changed since I blogged on Friday. I said then that there was a risk for a move to the 1.3860 level and that's still a possibility. From a bearish point of view, I don't like the way prices are holding with dropping RSI on the hourly chart. It definitely doesn't want to fall which means that the bulls and bears are locked in battle because there are many who want/expect it to fall. The pair is at tough resistance (price and fib retracement) and from any reasonable EW point of view we're at the end of a correction.
My tendency is to short but we'll see. The chart will be clearer as we go along.
No chart until there's something more definitive to show.
© 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.
EURGBP—support at .8662
My two long positions—one from .8582 and one from .8638—profit-stopped out at .8680 for +98 and +42 pips respectively. The pair stumbled at .8740 which is fib confluence and my prior profit target.
What seems to be happening, though, is that .8662 served as support in the pullback. This is where it found support on Friday. Momentum, as measured by RSI, fell lower than it had at that price level on Friday, setting up what's known as a hidden divergence. This hints at higher prices. 50% retracement of the move from .8562 to .8740 is .8651. If you study the daily chart you can also make a case for the pair currently tracing out a third wave. Finally, one can make out a cup and handle pattern which I've pointed out on the daily chart below. It's a short-term bullish continuation pattern.
All this leads me to believe the pair will make another run at .8740 and if it clears it will try for .8929 (monthly downtrend line from .9805 high) and possibly .9000, a big psychological level.
However it's also still possible to see further drops to the daily uptrend line at .8521 and there's additional support at .8463. There's continuing pressure on Euro although the pound is a pretty crummy currency right now as well. Longer term you can make the case for an overall downtrend. We'll just have to see but for now I'm long.
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.
What seems to be happening, though, is that .8662 served as support in the pullback. This is where it found support on Friday. Momentum, as measured by RSI, fell lower than it had at that price level on Friday, setting up what's known as a hidden divergence. This hints at higher prices. 50% retracement of the move from .8562 to .8740 is .8651. If you study the daily chart you can also make a case for the pair currently tracing out a third wave. Finally, one can make out a cup and handle pattern which I've pointed out on the daily chart below. It's a short-term bullish continuation pattern.
All this leads me to believe the pair will make another run at .8740 and if it clears it will try for .8929 (monthly downtrend line from .9805 high) and possibly .9000, a big psychological level.
However it's also still possible to see further drops to the daily uptrend line at .8521 and there's additional support at .8463. There's continuing pressure on Euro although the pound is a pretty crummy currency right now as well. Longer term you can make the case for an overall downtrend. We'll just have to see but for now I'm long.
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.
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