Friday, October 22, 2010

No posts today. See you Monday

Thursday, October 21, 2010

Watchful Waiting

Sometimes it pays to just watch and wait. That's what I plan to do today—less trading and more watching. Let's face it—you can't lose money if you're not in a trade. There's a lot of excited activity out there which hints things are heating up for significant moves.

AUDUSD—you have to love it

Anyone going long AUDUSD the last several months has to love this pair. I'm still long from yesterday's buy at .9685 and have taken additional profits at +190 pips. I'll let the rest of it run or hit its stop which is at .9795.

Still…this pair is as overextended as any of them and I don't consider yesterday's dip to .9662 steep enough correction to make a real difference. Two weeks ago the pair stumbled a bit and this week it had a lower low than last week. But we may see another stab above parity. Note that unlike the Euro hourly chart I posted in the last post, this pair has no negative divergence on the hourly chart. But it is at resistance so let's see what happens.

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—Probing upwards

Euro has moved above the channel I showed yesterday so the chances are good that it will make another try at the prior 1.4159 top, especially with yesterday's bullish candle. At this point the best thing to do if one is leaning short, as I am, is to watch for signs of another topside failure and short at that point. If you're leaning long then you'll want to enter on a pullback, possibly to the channel line at 1.3948. How will you know it's a pullback and not a new decline? Momentum on the shorter term charts will help. A move below 1.3587 or 1.3500 would be signs it was in a new leg down.

Note that on the hourly chart below there is negative divergence which makes me suspicious of this move up, even if it marginally gets above the 1.4159 level.

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.

Wednesday, October 20, 2010

GBPUSD—May uptrend line held

In the drop to 1.5650 yesterday, the uptrend line from May essentially held as did the 9/30 low of 1.5670. Given all the gloom about the UK possibly doing more quantitative easing, I'm a little surprised but everyone seems to be on a rally against the buck today. The C wave of the ABC correction could still be ongoing which would cause a push to 1.6391 (.618 of the A wave). As those who follow me know, there's still that daily bull flag with a target of 1.6461. Still, the break below 1.5749 convinced a lot of traders a top has been made at 1.6107. We'll see.

A move down will find support at 1.5650, 1.5627 (a former daily speed line) and the psychological 1.55, below which is probably a return to 1.5297. If the pair continues to rally, expect resistance at 1.5879 (today's high), 1.5997 and 1.6107.

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.

EURUSD—interesting recovery

The drop down to 1.3698 from the 1.4159 is looking suspiciously like a three-wave correction. We won't really know until it moves briskly above the channel I've drawn on the three-hour chart below. That probably wouldn't happen today—the move today has been If so, I'd expect 1.3619/1.3587 to hold in another downside move which would keep it roughly within the downward channel. If you look at this channel on a daily chart, it looks suspiciously like a bull flag. Hmm. Where did that come from? Am I to resurrect my bat projections from over a week ago? Is 1.45 to 1.47 or so in the cards? Interesting and tantalizing questions. And not out of the realm of possibility.

More likely near term is that there will be a momentum failure in the 1.40 to 1.4159 price range and a move down. As I wrote above, if that move stays above 1.3587, so much the better for any upside movement. The next level of support would be 1.3500 and that one will have to hold for bullish hopes to continue. For now, I'll keep an eye on momentum on the shorter-term charts to see if a short is presenting itself. What you'd want to see is a close in RSI below 70 on the hourly chart and then some downward price action to follow closely on its heels—real downward action, none of this 50 pips down and hover business.

If it does break below the 1.3587—the bears will come out and they will be eyeing 1.2588. That's not today's price action.

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—rally

Looks like Euro is trying to regain its ground. It has made it through the fib confluence resistance of 1.3892 and doesn't show signs of backing off. Let's see what happens around 1.3950.

EURUSD—correcting

I'm off to an appointment (with my swimming pool) so I'm not trading for the next hour or so. Right now Euro looks suspicious. After a high of 1.3850 it's retesting a broken uptrend line on the short-term charts. There's confluence and resistance up ahead at 1.3892. I still have one short position left but I'm going to wait and see on this one. If it breaks below today's low of 1.3698 then I'll assume the downtrend is resuming. But it may only retest that level as well. More later.

AUDUSD—bounce

I did a stop and reverse yesterday afternoon on this pair, going long at .9685. That meant the remainder of my short from yesterday earned 110 profits, only one pip more than where I'd taken partial profits.

Why did I do this? As most of my readers know, I almost never bail out of profitable trades. One reason was that I distrusted the rate of the drop. Euro, yes, I could see it as well as in other pairs. But while AUDUSD was overextended, the only "problem" on the horizon was that sudden China interest rate drop and I began to believe this was only over-reaction to unexpected news. The other problem was the round number .9700 level. It seemed to be hesitating. Finally, I already had divergence on the 15-minute chart which was also true for other charts. In the first moves of a real drop down, one wouldn't expect to see this. So I went long and have just taken partial profits at +95 pips.

I don't think all is well here. The pair, on a weekly basis, had a lower low than last week so it's showing weakness. It also dropped below the .618 of the most recent move up chart. I'm just not sure the party on the upside is over yet and in this correction has already overcome minor resistance at .9718. I'll be watching the correction channel closely and will post again later. I may short rather quickly if things look like they're falling apart.

Here's the 15-minute chart:












© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

Tuesday, October 19, 2010

AUDUSD—update

Took partial profits at +109 pips.

EURUSD—update

I took partial profits at +137 pips. Euro touched a low of 1.3792 which is close to a prior Elliott 4th wave at 1.3775. If it breaks that then next supports are 1.3750, 1.3630, 1.3500, and 1.3335. I added a second position at 1.3855 earlier but I've already moved the stop on that to breakeven.

AUDUSD—update

Much as I hate going short on AUDUSD (it's such a strong beast), I did so at .9755 as it retested its broken trend line and then seemed to falter. Obviously the stop is tight. However the pair has had a good run up and is overdue for a correction. There have been signs of overextension. With China raising its interest rate this may dampen things a bit for the Australian dollar. If the pair doesn't break the .9777 low, I may stop and reverse.

© 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—lower high yesterday

The remainder of my long from .9841 profit stopped (barely) at +10 pips.

Topping out at .9958 yesterday, the pair has since fallen just below its short-term uptrend line from August 25th at .9754. This means last week's very short-lived spike high of 1.0003 still stands. Best to watch behavior off this uptrend line. If it and the RSI uptrend line hold then that signifies some latent strength. A retest of the upper channel line at .9909 might offer a shorting possibility. On the other hand, the pair is working out its negative divergences on the shorter-term charts so don't write it off yet.

Support can be found at .9754, .9709, and the real line in the sand of .9542. Resistance is at .9845, .9909, .9958 and 1.0003.

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.

GBPUSD—approaching uptrend line

Cable is approaching its uptrend line at 1.5712 and a break of this would be significant. First, there's certainly a good case to be made for an ABC correction being in place. If so, last week's 1.6107 high marked the end of it. I'm still thinking that was too short (.618 of the A wave would have been 1.6391 and the bull flag had a target of 1.6461) but the market will tell. Certainly a break of the uptrend line along with a break of the RSI uptrend line on the daily chart would signal there may be more lows in the works. At that point I'd look for a short.

1.5670 is the 9/30 low and 1.5627 is a former daily speed line that the pair broke above. Then there's the psychological 1.55, below which is probably a return to 1.5297. If the pair rallies, expect resistance at 1.5997 and 1.6107.

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.

EURGBP—weekly

The reason I'm showing this chart is not because I'm trading it but rather because it shows how even after spinning tops and upper shadows on candles, a pair can still move higher. Which is what happened. Now it's true it's approaching the high of the upper shadow on last week's candle, .8842. What happens here will be significant for the pair and may signal that the advance has gone a bit too far. It's even possible the pair will drop back to .8715, .8600 or its break of key resistance at .8531. At that point it would certainly be an attractive candidate for going long, depending on what else is going on. However, if it overcomes the high of .8842 (a close above it), then .8888 is confluence on the daily chart and .9000 is a big psychological number.

Here's the weekly chart:











© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

EURUSD—weak

Euro reached a low of 1.3831 yesterday and bounced to a high of 1.4004 where it has faltered again. I decided to short this morning at 1.3937. There has been enough weakness lately with the broken trend lines and divergence, along with the more tentative nature of the candles (i.e. last week's weekly candle of a spinning top and daily candles with upper shadows) that the earlier price targets around 1.40/41 look reasonable. So a correction appears under way. Euro bulls are trying to hang on and the price is currently hovering around the .618 retracement level of the drop from last November through June of this year.

Support is at 1.3775 (a prior 4th wave), 1.3750, 1.3630, 1.3500, and 1.3335. At that point, buyers will most likely come in with sufficient numbers to provide a base and longs can come back into play. In any case, that's my outside target for now. My interim target is 1.35 to 1.3630. If the pair manages to recover on this current skimpy correction (with a low of 1.3831), look for a clean break (a close) above 1.4004 first and then last week's 1.4159 high. If it closes above both of those I will consider the highs I hypothesized about the last couple of weeks within reach.

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 18, 2010

USD Index--Monthly

When I ran the monthly chart this past Saturday, the index had just about touched its monthly uptrend line. One should see a bounce from the touch and given the behavior of some of the dollar pairs I think it's more likely than not.

There's still all that negative dollar sentiment and the Fed is sure to continue its less than effective quantitative easing. Have you ever seen a market bounce in those doomsday conditions? I have. Stay tuned. If the index begins to approach 78, there may in fact be a decent rally, at least up to the top of the symmetrical triangle.

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.

AUDUSD—another attempt at the top

I'm long from .9841 and I took some partial profits at +60 pips.

Last week's high of 1.0003 was very short-lived—a quick spike at 8:15AM EST on Friday morning. That was still a 7th week with a higher high and higher low than the prior week and in only one of those seven weeks (the week before last) was there a quick lower low. So it's not enough to say the uptrend is over yet and I'd expect another test of parity. Another failure to close above parity would not be positive. The fact that it broke below a reasonably drawn uptrend channel is not good. A retest of that channel line is 1.0065 and since potential price targets are at that level from last week, it would probably present a short opportunity. There is negative divergence on the three-hour chart.

Support can be found at .9801, .9767, .9709, and the real line in the sand of .9542.

Here's a three-hour chart:













© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

EURUSD—breaking below trend lines

You can see on the daily chart how Euro has broken two uptrend lines. It needs to hold on to this one. Dropping below 1.3830 will tarnish the bullish case. In Elliott Wave terms, a drop below 1.3775 (a prior 4th wave) would also communicate that things are no longer going well. Potential targets below that include 1.3750, 1.3630, 1.3500, and 1.3335. At that point, buyers will probably pile in unless the longer term downtrend has taken off in seriousness.

The weekly chart (not shown) had a spinning top last week which at best represents indecision and may be the signal the downtrend is resuming. That said, this correction is necessary. The pair may well make another push up. But it couldn't continue to do so at this steep angle of ascent and with the seriously overbought condition. Working its way lower would be a plus to the bulls as it would let it build energy for another upward push. My bias is still short but the fact is that the trend up has been strong. I will probably short if it breaks 1.3830/1.3775.

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.