EURJPY—Correcting

Yesterday's 115.42 high was the beginning of a correction for EURJPY. I've drawn a corrective channel on the hourly chart below. Note that the uptrend line from Nov. 1st (in red) comes in at the top of the corrective channel so that strengthens resistance there. The price decline has also caused a drop below the RSI uptrend line. Still, even with this, I'd expect to see the pair rally and I'm still long from 112.00. 113.91 was this morning's low, one pip below the previous low of 113.92. I wouldn't be negative until I saw prices begin to dip into the low 112s and close. I don't believe that will happen today if at all.

Another test near 114 will probably cause me to add to my position but with a tight stop below 113.90.

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—still within correction

GBPJPY is the same place it was yesterday when I posted--within the small correction within a larger correction. Staying above the psychological 1.30 is important. A drop below 128.75 would signal lower lows. I'm still long from 129.35.

© 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—correcting sharply

Euro has fallen back from yesterday's 1.4282 high to a low of 1.4033 this morning, prior to the Non-farm Payroll (NFP) release. This is just below the .382 retracement of the move up from the October 19th low (50% will be 1.3985). It’s market reaction to the more positive NFP number and it may be enough to turn Euro around. I closed one position yesterday at +311 pips. I have one left from 1.3883 which will be profit stopped out at 1.3983.

Looking at the corrective channel on the one-hour chart, one can see price has broken below and has retested. Behavior over the course of the next hour is important to watch. If it regains the corrective rectangle, watch behavior at both the mid-point and the top. If it continues to fall and approaches the bull flag breakout point at 1.3992, one will want to see it rally. Otherwise, expect lower lows. I'll post later.

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—rally

GBPJPY has rallied to a high so far today of 131.52 where it looks as though it's undergoing a small correction within its overall corrective rectangle. I'm still long from 129.35.

I expect stronger resistance at the top of the corrective channel at 132.10 as there is also some former price resistance coming in there. 133.39 would be next after that. Support should hold at 130.13 if it gets that low. I'll probably add to my position if it drops to 130.88/68

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.

EURJPY—nice rally

The pair has continued up, breaking through its 113.79 resistance and has reached a high so far today of 115.42. I'm still long from 112.00 and took another third off the table this morning at +303 pips.

On the daily chart below, I've drawn a corrective channel. Making it to the top of that channel would be nice which would bring it just above 119 to the C of an ABC correction. There I'd expect sellers to pile in. In the meantime, it has to get through current resistance up to 115.69. Additional resistance is at 116.67 (fib confluence). The yen has been strong recently and sellers are remembering that so it may take a bit to get through the current resistance.

On the daily flag I've also traced out a bullish flagpole with a broken dotted blue line and projected it upwards from the breakout point. At this point, I don't really see it getting there but maybe. In any case it would definitely have to clear 119.20 before it did so.

I'm in and happy but would I add to my position? A retest of 114 support would be lovely and would certainly bring in buyers, myself included. 112.83 is the next support after that.

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—breakout

The Euro has reached a high of 1.4266 so far this morning, thus clearly breaking above the Oct. 15th high of 1.4159 and my internal resistance line on my point and figure charts I've written about previously this week. The Fed is good to the Euro—"Hell yes, we'll dilute our dollar with more QE." But the important thing is that this move was strongly hinted at in the charts before the Fed announcement. See my Monday analysis.

I'm still long with two positions from 1.3883/85 and am close to closing the first one.

With the high of 1.4266, the Euro has entered into a general resistance zone outlined with the two horizontal blue lines on the daily chart below. Looking left, one can see an area of consolidation back in the late December to mid-January time frame. The top of that is the January high of 1.4579 of which I've previously written. The downtrend line on the monthly chart (not shown) comes in around 1.4500. 1.4450 is .618 of the entire move down from 2008. 1.4448 is the price target (minimum) for the triangle it broke above.

Once it gets beyond this zone—better stated as if it gets beyond this zone—I'll start looking at some higher targets such as the bat pattern I proposed in early October, or the extension of wave c to 1.618 that of a, or, how tantalizing, the possible bull flag it broke above. I have traced the bull flagpole and potential target on the chart below with a blue dotted line. All that, though, as of today, is pie in the sky. Let's not forget this currency is as crappy as any other—that is there is not strong fundamental strength to carry it over the long term although I imagine ECB is throwing money at it.

Should it begin to falter, look for support at 1.4214, 1.4159, 1.4080, 1.4048 and 1.3992 which would just about bring it back to a retest of the bull flag. If it then rallied from there I'd definitely add to longs. Is there a way to get in now if you're not already in? One could buy with a tight stop at 1.4200 or thereabouts with a potential eye on 1.45. However, it would need a very tight stop. Another possibility it to buy the breakout above 1.4266. Again, tight stops are mandatory.

Here's the daily chart. The only real negative sign is negative divergence with RSI.










© 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—narrow range

Euro has been in a narrow price range of 1.3992 to 1.4059 since yesterday morning. Everyone's waiting on FOMC, I guess. Regardless, until it breaks above in a definitive fashion there's not much to add to yesterday's post. I still have two longs from 1.3885/83. I took partial profits on one at +131 pips.

© 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—at resistance

After yesterday's post on this pair, I did go long at 129.35. I just took partial profits at +102 pips.

I wrote yesterday that corrections often stay within parallel lines. I still believe the pair could get back to the top of this upward correction (131.30). However at this point, it's at the mid-point of the correction with a high of 130.54. This is resistance since 50% retracement of the most recent down is 130.73 and this is also a prior high. If it falters here, look hard at the action around the upward line of the correction at 130.33. There the line joins with the downward trend line so it strengthens it as support. There could be a retest and then a resumption of the rally. If so, expect to see 131.40, 133.03 (fib confluence), and then higher. RSI is still coiling and should break above the coil if the pair is serious about a move up.

Breaking below 130.33, however, opens up 128 again and below that look for a retest of 126.44. I have price targets below that from my Point and Figure charts of 121.50, then 120.40, 119.70, and .9990.

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.

EURJPY—hovering at high

Yesterday's evening star on the hourly chart didn't pan out (or perhaps hasn't yet panned out) as the low was only 112.83 before it rose to a high of 113.64, so far today. I'm still long from 112.00. It looks more as though yesterday's chop was a small zigzag correction with leg C at 1.618 that of A (within three pips). The hammer at the low should hold as support. However, as one can see from the hourly chart, this could have been part of a bigger ABC correction with leg C still to come. The high this morning is very close to yesterday's high before the correction (113.48). Whatever—this chop must stop and the pair needs to push above 113.79 into the 114 area today to justify a bullish outlook. On the daily flag (not shown) one can see a bullish flag that would project nice higher prices.

Resistance is at 113.79, 114.66/79, 115.69 and 116.67 (fib confluence). Should it falter, it could correct back to 112.00 or 111.53. Below that support is at 107.92.

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.

USA--get out and vote

OK, it's election day in the USA and everyone needs to get out and vote. Hopefully not for the Tea Party--those people filled with passion but no knowledge; hopefully not for the Republicans who systematically set up the country for economic collapse and started an erosion of civil rights, the likes of which go against everything this country stands for. Regardless, though, get out and vote.

EURJPY—possible evening star

I'm long in this pair from 112.00 but there's a potential evening star forming on the hourly chart. Since it's near resistance this is ominous if it happens. As a result I just took partial profits at +117 pips. The current hourly candle needs to close near its low for this pattern to be confirmed. If it clears above the top, look for higher highs, possibly to 114.66/75 and beyond.

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.

USDCAD—twirp

I don't mean twirp to be testy as in something that's contemptible although the thought crosses my mind. I meant it as twirp—the USD is like a small bird twirping in a tree. Perhaps the bird is about to be devoured; perhaps the tree will fall from the mighty ax that stands in for economic policy these days—QE.

OK, USDCAD broke down below last week's inside week—not good. The low is 1.0082 so far. The key support is the weekly hammer (three weeks ago) at .9981. Below this could see a resumption of the overall downtrend. I'm not convinced this is going to happen, though. For one thing, you have a nice morning star pattern on the weekly chart with that hammer being the middle of the three-candle pattern. Still, convinced or not, the pair needs to overcome 1.0249 and better, 1.0374 to make a credible case for recovery. Waiting to buy is the conservative course here and of course if it breaks that hammer low you wouldn't buy at all.

Here's a 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.

GBPJPY—possible long with stop and reverse

I'm leaning long and here's why. We’re near a good support level of 128.00 (yen pairs like round numbers) and near an uptrend line at 129 (another round number). This may only be a correction before further drops but corrections often stay within parallel lines and it could get back to the top of this upward correction. (131.30) The 50% retracement of the most recent down is at 130.73, also a prior high. That's a nothing move pip-wise for this pair. 133.03 is a confluence level and a break above the channel line to here would most likely set off a short squeeze that could push it further upwards. So I may be looking for a long this morning.

When would I know I was wrong if I was long? Certainly below 128.00—so an entry here might carry a bit too much risk for the average trader. One could buy at 128 with a very tight stop (and I do mean tight, i.e. 127.90) but I'd be watching momentum closely at that point. Notice how RSI is coiling within a symmetrical triangle. Stop and reverse would be the probable trade at that point, looking for a retest of 126.44. I have price targets below that from my Point and Figure charts of 121.50, then 120.40, 119.70, and .9990 (gulp).

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—broke above triangle

Euro dropped to a low of 1.3864. I bought two positions yesterday, one at 1.3885 and one at 1.3883 as it rose from the low. The drop meant the E leg didn't completely form, not unusual for a pair getting ready to thrust upward. It broke out of the triangle at 1.3985 and its high so far is 1.4042. This however is not good enough to go to the bank with. It needs to clear 1.4080 (the prior high) and then, more important, 1.4159, the Oct. 15th high. This brings it near 1.4180, my 45° internal trend line on my Point and Figure chart.

If it clears those resistance levels then, as I wrote yesterday, the monthly chart shows a downtrend line coming in around 1.4535. 1.4448 is the price target for the triangle. This target is around the .618 retracement of the entire move down from 2008 which is at 1.4450. A close above that monthly downtrend line would be one piece of evidence that this correction is over and one might forecast higher highs from there.

Until it clears resistance at 1.4159, there's still a risk the breakout from the triangle is a fake out. This can be tricky to gauge. A retest of the broken line would be good but if it makes an hourly close well back inside the triangle, I'd be suspicious.

For my current two trades I have a profit stop. If it retests the trend line of the triangle I may add a position.

Here's the three-hour chart.












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

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

USDCAD—monthly

I haven't blogged about this pair in a while—that doesn't mean I haven't traded it but I can only write so much as I write the blog for free. Price is currently at the bottom of an upward sloping channel. Yes, it could be a bear flag as the pair gets ready for another drop down but there are other interpretations. Time is about equal for the up and down legs of the move so I'd expect a move up. If it went to the top of the channel….well, let's just say that would be a nice tidy profit but I'm thinking that 1.0658, the lower of the three consecutive candle tops (July through September), is achievable. In order for this to happen, the pair needs to scale 1.0374. If you didn't get in at the breach of resistance last week, entering around 1.0130/40 would be at the .618 retracement of the most recent short-term move up. The stop can be fairly close below .9977 (the lower shadow of October's candle).

Even if you're overall bearish on this pair, seeing this as an ABC correction, leg C would have to be up. At .618 of A (1.9058 to 1.3065) that would be a nice long. However in this view it's not clear that wave B is over.

The weekly chart (not shown) showed that last week was an inside week. This indicates indecision but since the pair also breached resistance at 1.0230 (Oct 8th high), it could also signal a bottom is in place. We'll just have to see.

Here's the monthly chart (my trades don't show on the monthly chart because I use a different charting package for weekly and monthly charting).











© 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—three-hour

Dropping down, way down, from the monthly analysis, one can see that on the three-hour chart (and on the daily) there is a symmetrical triangle forming with leg D completed. The Elliot Wave people can bleat all they want about Euro being ready to turn down but a triangle in their view precedes breakouts in the direction of the prevailing trend. Which is up.

In my monthly analysis I wrote about buying a pullback. If I did this I'd want to enter around 1.3762 (the bottom of the triangle to 1.3807 (the recent low). One could also make a case for entering around the current levels because price is at a fib confluence point; however the risk is much higher (stop should be below the triangle but you could set it tighter at 1.3880.). The potential loss has to be weighed against potential gains (risk reward). Conservative traders would wait until the breakout above the top of the triangle with the stop below the downtrend line. My personal strategy is to see if the pair can hold above 1.3890. If it does I may risk a small long. Otherwise, I'll re-enter as it approaches the bottom of the triangle with a stop and reverse in place.

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—monthly

October was the fourth month that Euro had a higher high and higher low. It didn't close above the psychological 1.40 but a high is a high. As I wrote on Friday, a short look backwards (10 years) shows that Euro has gone up in November in eight of the last ten years. 10 data points does not a statistically reliable study make but it's worth noting. From eyeballing the monthly chart one can see that the downtrend line is coming in above current prices at around 1.4535. As I also wrote on Friday, this is in the range of some price targets and is just above the .618 retracement of the entire move down from 2008 which is at 1.4450. Looking at the red channel lines, one can see that this would be within the range of a correction since many corrections stay within parallel lines drawn off the origin of A to the end of wave B. So a close above that downtrend line would be a piece of evidence that this correction is over. Notice the words, "piece of evidence." Technical analysis is made up of the weight of evidence and those that trade on only one piece (or one indicator) often end up broke. Another way of looking at this is to see the lines within the red channel as representing a massive bull flag (and I do mean massive—a price target from this would be astonishingly high but I'll let you figure that out).

Note the rise from the classic morning star formation. Note, too, that three of the last four candles are very bullish and that even with the upper shadow on the October one, the bulls are coming into the month in control of the situation. To me, unless bears take control soon, this strengthens the argument that prices may rise to the downtrend line and that this November might be another up month in line with the scant, ten-year seasonal data.

When I look at other evidence, such as my daily point and figure charts (not shown), I have an internal downtrend (45°) line coming in at 1.4180 (not too great) but I also have price targets well above that line.

On the other hand, sentiment is very bullish and markets have a way of going against that. On a daily basis it can be reasonably argued that we're at the top of an Elliott Wave correction (see prior posts) although wave c at 1.618 times that of wave A also pushes us into the mid 1.40s. Then there is that pesky harmonic pattern (the bat) that I blogged about at the beginning of October that would a high well above where we are now.

OK, I have some mixed evidence but the weight of it is leaning bullish. Therefore my choice as a trader is to buy pullbacks in the shorter time frame. I'll discuss that in the next post. Price behavior, once it gets to 1.4450 to 1.4579 (the January high) is going to be key. Maybe it will get there this month.

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.