Tuesday, July 19, 2011

Hiatus

I'm taking a little bit of a hiatus from the blog. It's something I do for free in my spare time and I have enjoyed doing so, but right now it's a bit too much. I also want to think about its future direction.

Wednesday, July 13, 2011

EURUSD—bounce

The bounce has been stronger than some expected. One can now trace out a potential ABC correction on the three-hour chart of 1.3827 to 1.4054 for A and down to 1.3952 for B. If C were to equal A, the price target would be 1.4169. Price has stalled at 1.4111 but now seems to be attempting to base at 1.4053 (actually it has dropped slightly below) on the 15-minute chart. Since that was the high for the A leg of this scenario, one might see a move to 1.618 of A or 1.4303. I actually like 1.4303 since that aligns with a bounce I’d expect on my point and figure chart in order to create a stronger sell signal. It is also close to the 50% retracement point of the move down from 1.4578.

There is a former confluence zone of 1.4112 to 1.4163 on the shorter-term charts. This correlates with the resistance zone I wrote about yesterday of 1.41 to 1.42. The broken monthly uptrend line is at 1.4147. Certainly if price gets above 1.42, it makes the 1.43 target more achievable. There does seem to be a more positive attitude to risk this morning.

Would one go long here then, hoping to pick up a hundred pips or so? Not necessarily. However, to do so, would require watching the short-term charts for both price behavior and momentum. If one believes that the downward move that began Monday is indicative of an Elliott wave three, one would want to sell rallies.

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

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

Tuesday, July 12, 2011

EURUSD—Summary

I’ve been on vacation the last week and am not fully back but have taken my first peek at the markets in a week this morning. There is much going on with the Euro.

First, on the monthly chart, the pair has broken the steeply ascending uptrend line with its drop yesterday. That is not too surprising—steep angles are difficult to maintain. The question is whether this is now the wave three down that an Elliott interpretation supports.

Euro never regained the 1.4697 prior high which shows weakness. From a daily perspective, the potential bullish triangle appears nullified by yesterday’s drop. On my daily point and figure (P&F) chart, the pair generated a sell signal.

The low this morning was 1.3837, forming a hammer on the three-hour chart. The pair has bounced sharply from there but on the 15-minute chart, price action appears to be tracing out a three-wave correction. If so, the C wave high so far of 1.4024 is not quite equal to the A wave (1.3827 to 1.3963). If the C wave is 1.618 of A, the high will be 1.4107.

There is a resistance zone from 1.41 to 1.42. This includes the potential wave C high, the broken monthly uptrend line of 1.4147 and price resistance. Beyond that is 1.4340. However, there is strong support at 1.3820/37 and the 200 daily SMA is at 1.3912. If the pair breaks the 1.3820 support, there should be additional moves down in line with the third wave scenario that may be playing out.

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

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

Tuesday, July 5, 2011

Thursday, June 30, 2011

EURUSD—mixed signals

Euro managed to break above key resistance at 1.4450, reaching a high of 1.4521. Price is stumbling a bit now. The most bullish case is that there is an Elliott triangle forming. If one assumes that point D was 1.4521, then there should be a move down, possibly to 1.4141 (although sometimes price falls short of E before thrusting out of the triangle) and then new highs. That scenario ties in with a butterfly pattern that may be forming where the end of the butterfly would be around 1.52. Continuing this bullish fantasy, this would mean we were ready to pull out of wave four for a fifth wave move (wave one starting at 1.1876). A potential target, using the golden section, would be 1.5264. Hmm. Pretty close to the butterfly target. Supporting this bullish heresy would be the point I made the other day—RSI isn't dropping significantly on the daily chart, even when Euro finds new lows.

If one looks at price action from the perspective of an ABC correction off the top of 1.4942, wave C would have been .618 of wave A at 1.4096. The low was 1.4074 before price began moving up.

Forgetting the Elliott interpretation, there is a symmetrical triangle. These can be a continuation move but can also signal a potential reversal. Price is above the 50-, 100-, and 200-SMA on the daily charts.

Finally, on the four-hour chart, one might say a double bottom formed at 1.4074 and 1.4103 with it confirmed at 1.4442. The target for this is about 1.4784. This target takes it above the 1.4697, a number important to Elliott bears.

Whatever else one can say about the upward price move from yesterday, it took out a number of stops from short sellers. The market loves to do that but I consider it a warning for higher prices.

Looking at the downside from an Elliott perspective, one can maintain that wave two peaked at 1.4697. Price is at the beginning of wave three and although one would prefer less upward price action, as long as price stays below 1.4697, one can maintain this interpretation. One can dismiss the alternate bullish triangle by saying the ratios between the legs are not quite right. If this is true, the targets are attractive

I'm leaning less bearish than I was because I'm not seeing a relationship between price and momentum on the hourly chart. I blogged about this on June 22. RSI drops below 70 but price does not move down much. Still, the pair is at resistance and then next resistance is 1.4550/1.4600 so behavior there may tell the story.

There is short-term support at 1.4450/42, 1.4328 and 1.4238. The latter two look as though it is a transposition of numbers but it is actually the June 29 and June 28 low respectively.

Here's the four-hour chart:
















© Dianne Fecteau, 2011. 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, June 29, 2011

EURUSD—Time to fish or cut bait

After a thwarted attempt to get above 1.4442 yesterday, Euro has been hanging about just below the key 1.4450 level since early this morning. If it manages to break through, look for a move to 1.4600 then 1.4697. Above that would negate a bearish case for the most part. If it breaks below 1.4103, this would confirm a double top.

© Dianne Fecteau, 2011. 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, June 28, 2011

EURUSD—short-term momentum

Euro has pushed up to 1.4370 with good momentum on the short-term charts. If it easily takes out 1.4385 and the psychological 1.44, the key resistance of 1.4428/50 will be the next target.

© Dianne Fecteau, 2011. 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—wavering

The bears certainly expected Euro to begin its plunge by now, especially those who believe price is within a third wave down. The bulls would like to see it scoot up and take out 1.4442 (June 22 high) and then the 1.4697 prior high. Both sides are bound to be somewhat frustrated as it plays its small moves with no definitive action.

Those who went short in the 1.42 area are probably approaching stops. This may fuel some additional price rise. However, logical resistance is the 1.4385 confluence area, 1.4378 (weekly pivot R1 calculation) and 1.4428/50 which is key resistance.

On both a weekly and daily basis, there is a bearish bias. However, RSI lows on the daily chart are not as low as one would expect to see if the bears had true control. The daily uptrend line (since January), broken with the June 16, 1.4074 low, has been serving as a magnet line for price.

On my three-hour point and figure chart, Euro is caught in a symmetrical triangle with small columns of X and O. This only means that supply and demand are approximately equal. Underlying this, though, is the real question of whether accumulation or distribution is taking place. There needs to be a definitive move one way or the other to answer this question.

I may try a short in the 1.4340/85 area. I'll post a chart when there is a more definitive move.


© Dianne Fecteau, 2011. 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, June 27, 2011

Friday close, pivot, SMA

For each of the following nine pairs, I've listed the Friday close, the annual pivot points, the 200- and 100-SMA, and the close for 31 Dec. 2010. I look at a series of comparisons such as this every week. While I don't care so much where a market has been as where it is going, some items pop out when you compare various parameters.

First, all pairs except for USD led pairs (USDCAD, USDCHF, and USDCHF) are above their 2010 year-end close. This is generally positive. However, if one considers the highs for the year for each pair, all pairs that are above their 2010 close are below their highs for the year. Of the three below their 2010 close, the USDCAD and USDJPY are above their lows.

Five pairs are below their annual pivot points. In addition to the USD-led pairs mentioned above, both EURJPY and GBPJPY are below.

Four pairs are above their daily 200-SMA. These are AUDUSD, EURGBP, EURJPY (barely), and EURUSD. When price is below a 200-day SMA, it is often bearish. Three pairs are above their daily 100-SMA, AUDUSD, EURGBP, and USDCAD. Surprising about the latter—it is worth watching to see if it maintains that and the 100 serves as support.

I also watch the 50-daily SMA and I am always interested when there is a 50 crossing the 100 or 200, particularly if it occurs in conjunction with a pattern.

Nothing here is definitive unless used in conjunction with other analysis. It is just something to think about.












© Dianne Fecteau, 2011. 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, June 24, 2011

No posts today

I'm implementing my summer Friday's off rule effective today. I'll see you Monday.

Thursday, June 23, 2011

EURUSD—broke 1.42

A bit of battle between buyers and sellers went on between 1.4212 and 1.4236 but supply prevailed (so far) and has pushed Euro to a low of 1.4187. This is just below the June 20 low of 1.4192. It would strengthen the bearish case to have an hourly close below there.

© Dianne Fecteau, 2011. 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—lower

Key resistance at 1.4428/50 held nicely. Euro broke below the uptrend line of the rectangle and the 21-SMA on the four-hour chart that I blogged about yesterday. The low so far this morning is 1.4235. This implies that the move up from 1.4074 was an ABC correction (A= 1.4074/1.4340; b=1.4340/1.4192 and C topped out close to the point where C would equal A).

I missed the break, having knocked off early yesterday to run around town checking out dog kennels for boarding our puppy. Sometimes the home front calls. However, a rally is possible, given that the current low is close to the 50% point of the move up from 1.4074 to 1.4442. The pair might rally to 1.4328 (the 21-SMA on the four hour chart) or 1.4381, the breakout point from the rectangle. Additional resistance derives from the weekly 10-EMA (1.4317), and two fib levels (.382 of 1.3429/1.4942 at 1.4364 and .382 of 1.4942/1.3970 at 1.4341). With a rally, I'd sell weakness. If the rally does not happen (and it might not if we're in a third wave), then I will enter on smaller rallies with weakness on much shorter-term charts.

However, it's important to remember that until price drops below 1.4074, thus creating a lower low, there is still resistance up to 1.4697.

© Dianne Fecteau, 2011. 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, June 22, 2011

EURGBP—contrast with EURUSD

Contrast the EURGBP with the price behavior of EURUSD. On the four-hour chart, there is strong move up, especially with the last two candles. This pair, too, is rising within an upward sloping rectangle so it is time to take some profits on my long as it approaches that point. The longer, downtrend resistance line is coming in just above that boundary. However, note that unlike the Euro, momentum, as reflected in RSI, is also maintaining its uptrend line. It is interesting that on this pair, as with the Euro, the 21-SMA is tracking the lower boundary of the rectangle.

EURGBP offered clearer buying signals after weekend analysis than did EURUSD. For example, the week ending 17 June closed with a hammer candle near a support level in the context of what appeared to be a corrective move within an overall uptrend.

Resistance is at .8938/76 (monthly pivot R2, downtrend line, rectangle upper boundary, June 8 high) and .9044.

Here is the four-hour chart:















© Dianne Fecteau, 2011. 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—hovering near key resistance

Euro managed to climb to 1.4434 within an upward sloping rectangle. On the four-hour chart, the 21 SMA is tracking the lower boundary of the rectangle. Key resistance is 1.4428/50. The fact that price is hanging around just below here is troublesome to bears—when price maintains a narrow range beneath a key resistance it often manages to break through. If it does so, there is psychological resistance at 1.45. After that is 1.4573—the upper boundary of the rectangle and the point where the downtrend line from 1.4942 comes in. Finally, there is key resistance at 1.4697, the prior high.

There does not appear to be strong momentum behind the pair, i.e. note that RSI has fallen below its uptrend line. If price falls below its uptrend line, that confirms weakness in the pair. Candles on the four-hour chart are exhibiting upper and lower shadows. This indicates indecision. There needs to be a strong move in one direction or another for traders to jump in and rev up the momentum.

Best approach for now is to wait for a clear sell or buy signal. As I wrote yesterday, a push to 1.45 or above on the hourly chart where RSI moves into overbought territory (above 70), followed by RSI closing below 70 would be a sell signal, especially if combined with a bearish candle formation. A strong move above 1.4573, especially with a retest, would be a buy signal. My suspicion is that price is in a third wave down in the larger period so I am more inclined to look for a sell signal. However, once I recognize this bias I have to be alert to not let the bias drive my trading and pay close attention to the chart.

Here's the four-hour chart:



















© Dianne Fecteau, 2011. 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, June 21, 2011

EURUSD—narrow range

Euro is wavering in one of those narrow ranges so far this week between 1.4291 and 1.4384, no doubt by short-term fundamental, kneejerk focus on Greece. This is under key resistance at 1.4428/50. Even if it rallies above there, it's doubtful it will get beyond 1.4697 but of course that is a lot of pips between the two.

I am out completely as of now. My plan is to wait to find a selling opportunity. To do this, I'll use resistance and momentum on the hourly chart. Ideally, I would like to see a push to 1.45 or above where RSI moves into overbought territory (above 70). I would then wait for an hourly close below 70 and short at that point. That combination should provide for a tight stop.

The more bullish possibility in the short term is that Euro may be tracing out a butterfly pattern on the daily chart. Given that the upward sloping rectangle on the weekly chart (see Monday's blog) constrains prices between 1.3564 and 1.5368, 1.5308 (1.27 of the XA leg) is within that realm of possibility. For this to be possible, price needs to clear 1.4942 and there would probably be momentum clues well before then that the move up was gaining strength.

© Dianne Fecteau, 2011. 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, June 20, 2011

USD Index—monthly

I have not blogged about the dollar index recently. On the monthly chart, one can make the case for a move up from the bottom of the symmetrical triangle where it will find resistance at either the longer term downtrend line (80.47) or the upper boundary of the triangle at 88.49. The move from 89.63 down to 74.15 (1,548) had a nice balance with the move from 88.66 down to 72.69 (1,597).

Any drop below 72.69 would be bearish. It would also raise the possibility that there is a double top in with the confirmation point at 73.50. The price target would be 69.81. No doubt that would bring on the same tired response from the US Treasury that “we support a strong dollar.”

Nonetheless, given the potential weakness in the Euro and other currencies relative to the USD, I think a rally is more probable.
Here’s the monthly chart:
















© Dianne Fecteau, 2011. 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—weekly analysis

Euro is at a critical point on the weekly chart. The week ending 6/17 had a low of 1.4074 and formed a hammer candle on the weekly chart. Since 1.4074 is in a solid support zone, Euro needs to stay above this low. This support zone is drawn from pivot calculations, fib retracements and price. However, note that on the weekly chart below, it is also the area where the downtrend line from the 1.6041, 2008 high meets a shorter-term uptrend line from the 1.2874 low. Bears and bulls are battling it out here.

From the Elliott Wave perspective, price action does not look bullish on the weekly chart. There is a three-wave move from 1.1876 to 1.4283 and then another three-wave move from there down to 1.3970. Alternatively, one could say there’s an X joining the first three wave move at 1.2874 and a double zigzag beginning from 1.2874. If so, that might mean price action is in the C wave of the second zigzag and there could be additional moves up. Regardless, though, it is difficult to make the case that the move up from 1.1876 is impulsive. I am not enamored of Elliott—the best counts occur so after the fact—but it is something to consider as an indicator of market psychology.

From a strict pattern point of view, the upward sloping rectangle constrains price action to between 1.3564 and 1.5368. The top line of the rectangle is a duplicate of the bottom line as to angle. In rectangles, price gets batted back and forth until there is a clear break out of the rectangle, i.e. one side becomes overwhelmed by the opposing side. Price fell short of the top line at 1.4942. Sometimes this hints at the breakout direction, in this case down.

Note on the weekly chart that RSI has dipped below its uptrend line. This happened in conjunction with price breaking an uptrend line drawn from January (the red dotted line on the chart). That line had a steep angle of ascent and was bound to break but if one extends that line, price tested it as resistance at 1.4647. If price closes beneath the uptrend line from 1.2874, that would be bearish and would make the longer term uptrend line vulnerable for testing, just above 1.35.

Adding to this bearish picture is the fact that since the May high of 1.4942, there has been a lower low at 1.3970 and a lower high at 1.4697. In fact, regardless of trend lines, since July 2008, almost two years ago, there has been nothing but lower highs (1.5144 and 1.4942) and lower lows (1.2329 and 1.1876). That is a downtrend. While trends reverse, it hasn’t proven to reverse yet. The first clue would be taking out 1.5144.

On a more positive note, Euro is holding above support (the 45° trend lines) on both my daily and three-hour point and figure charts. That reinforces the price zone above 1.40 as support. If price breaks beneath 1.3970, look out below. That would also be near the 50% retracement of 1.6041/1.1876.

The weekly cloud chart shows Euro to be well above the cloud so that’s bullish for looking for buy opportunities on the daily (or shorter) basis.

Immediate resistance is 1.4428/50 (the daily, 50-SMA, the monthly pivot calculation, the .618 retracement of 1.6041/1.1876), 1.4512, 1.4683/97 and 1.4735 (.786 retracement of decline from 1.4942). Above 1.4735 would be very bullish.

Support is 1.4186/52, 1.4074, 1.3970/59/22/08 (prior low, 50% fib mentioned above, monthly 10-EMA, and 50% retracement of 1.2874/1.4942), 1.3831 (the 200 daily SMA), 1.3780/40, and 1.3675.

Here’s a weekly chart:



















© Dianne Fecteau, 2011. 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, June 17, 2011

EURUSD—rally

Euro has rallied to 1.4299 in what appears to be an ABC correction on the hourly chart (Wave A is 1.4074 to 1.4222; wave B drops from there to 1.4128). This means C has the potential of 1.4219, 1.4276, and 1.4367 so price is just above the point where C would equal A. The 50% retracement of the move down from Tuesday's high of 1.4497 is 1.4286; .618 would be 1.4335. There is additional resistance up to 1.4445 and of course the prior high of 1.4497. The latter is key resistance—if that breaks then it negates many bearish signals.

Price has not met the bear flag target of 1.3994. What is troublesome is that if one examines RSI on the daily chart, it is maintaining itself above 34.92, the low of RSI in January. That needs to start dropping to support the idea that the bearish view is the correct one. Euro also managed to stay within support (the internal 45° line) on the daily and three-hour point and figure charts I maintain.

Nonetheless, the case is still there for being in a third wave down. Let's see what unfolds.

© Dianne Fecteau, 2011. 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, June 16, 2011

EURUSD—testing interim resistance

Euro is testing the uptrend line drawn on the daily chart from January with the high so far today of 1.4178. This resistance is reinforced by the fact that it’s a fib confluence zone—the .382 retracement of 12874/14942 is 1.4152 and the .50 retracement of 13429/14942 is 1.4186.

I’m of two minds about this type of resistance. If it keeps battering at it, Euro may break through. On the other hand, another rebuff could send it back to its downward slide.

If this is an ABC correction on the hourly time frame, potential C wave targets are 1.4178, 1.4217 and 1.4281. The first one supports the high as resistance so I may add a short position with a tight stop. One must keep the weekly support line in mind, however.

© Dianne Fecteau, 2011. 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—at weekly uptrend line

The Euro has continued down, touching 1.4074. This is near the lows of May 13 and May 16. The 100-daily SMA (currently 1.4159) failed to serve as support, something that occurred in both February and May. Price is sitting on an uptrend line on the weekly chart (drawn from January). A break of this would be significant and would confirm the break of the RSI trendline.

The bear flag target of 1.3994 is within sight.

It appears likely that, as I wrote on Monday, this is the third wave down with the move up from 1.1876 being a double zigzag correction. If so (and I’d be cautious here as the markets have shown a tendency to swing one way or another depending on the risk assessment de jour), then there is a lot further to go. The best strategy would be to sell weak rallies. There is still a chance this could be an ABC correction with this being the C leg. Additional targets if that is true are 1.4046 (C = .618 A), 1.3675 (C = A) and 1.3074 (C = 1.618 A). Paying attention to price and momentum behavior between 1.3994 and 1.4074 should offer clues as to where things go from here. If price gets below 1.3862, it destroys the bullish Elliott Wave count (see Monday’s analysis).

Resistance is at 1.4129 (the weekly 20 EMA), 1.4151/86, 1.4234/88, and 1.4320/50.

Here’s a weekly chart.














© Dianne Fecteau, 2011. 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, June 15, 2011

EURUSD—new low

Euro touched 1.4206 but in doing so formed a hammer on the 15-minute chart with positive divergence. I think it can get lower—at least to 1.4155 (the daily 100-SMA) and maybe 1.4096 but it is probably time to take some profits. I have two short positions—one from 1.4581 and one from 1.4447.

© Dianne Fecteau, 2011. 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—trying to base

Euro has dropped to a low of 1.4264. The bear flag target (see yesterday's blog post) is 1.3994 so obviously it has a way to go. However, it may be trying to base for a recovery.

The hourly candle's low that completed at 9 AM was 1.4264; the one that completed at 10 AM was 1.4265; and the one that just completed at 11 AM was 1.4272. Yesterday, I wrote that 1.4288 was support. If the basing attempt fails, the next support level is 1.4236, 1.4186/51 (50% of the move from 1.3429 to 1.4942 and the daily 100-SMA and near .382 of 1.2874/1.4942). After that is 1.4096 (C wave target if .618 of A (see Monday's analysis), and 1.40 (psychological).

If it consolidates before additional downward price movement, expect it to reach a high of 1.4347/53 or 1.4378/90 before turning down again. Above that should find resistance at 1.4444. I would be highly suspicious of additional downward moves if it regained that much. However, there have been a lot of back and forth in the markets as uncertainty continues to cast its shadow.

© Dianne Fecteau, 2011. 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, June 14, 2011

EURUSD—bear flag

On the four-hour chart, Euro may be forming a bear flag. This pair loves to stair-step its way down so this would be in line with past price behavior. The .382 retracement of 1.4697/1.4288 was 1.4444. Price reached 1.4472 in the hour ending 7 AM EDT and for the hour just ended (8 AM), the high was 1.4468. The weekly pivot calculation is 1.4455. I would not rule out a move to 1.4493—the 50% retracement—or 1.4541, the .618 retracement. The latter is just above 1.4538, the .382 retracement of 1.4942/1.4288. Regardless, the zone between 1.4444 and 1.4555 is strong resistance.

Should the stinker—sorry, Euro—get above there, it means the pair would have regained the broken short-term trend line. After that, 1.4697 should cap prices. If it does not do so, there is little resistance to the high of 1.4942.

Support is 1.4406/4378 (.382 of recent move up, confluence, near flag breakout point, polarity), 1.4348, 1.4288, 1.4186/51 (50% of the move from 1.3429 to 1.4942 and the daily 100-SMA and near .382 of 1.2874/1.4942), 1.4096 (C wave target if .618 of A—see yesterday's analysis), and 1.40 (psychological). The bear flag target is 1.3994.

I'm leaning bearish, obviously, as I added another short position. However, closing prices on both my daily and three-hour point and & figure charts, show potential breakouts to the upside. I would take them seriously if they occur.

Here's the four-hour chart:
















© Dianne Fecteau, 2011. 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, June 13, 2011

EURUSD—daily chart

On the daily chart, one way to interpret the action from 1.1876 is from a bullish point of view as Euro makes its way up an upward sloping rectangle. The wave action would be:

Wave 1: 1.1876 to 1.2467 (591)
Wave 2: 1.2467 to 1.2152 (315)
Wave 3: 1.2152 to 1.3335 (1,183)
Wave 4: 1.3335 to 1.2588 ((747)
Wave 5: 1.2588 to either 1.4159 (1,571 pips) at which point began an ABC correction or to 1.4274 (1,686 pips) which then initiated a correction down to 1.2874.

That meets the three inviolate rules of an impulsive wave—wave three is not the shortest wave; wave four does not poke into wave one's territory, and wave two doesn't retrace more than wave one. The purpose of an impulsive wave is to make forward progress and price did do so. The action from 1.2784, though, is less clear. Bulls might say that would be the beginning of wave three. However, if it was then:

Wave 1: 1.2874 to 1.3862 (988)
Wave 2: 1.3862 to 1.3429 (433)
Wave 3: 1.3429 to 1.4942 (1,513)
Wave 4: Either it completed at 1.3970 or it is still in process. If it is still in process, then B topped at 1.4697 and C can go no lower than 1.3862 (because wave four cannot enter into wave one territory). In a zigzag, wave C is usually .618A, equal to A, or 1.618A . If it is .618 of A then that price is 1.4096. To equal A, the price would have to drop lower than 1.3862 which should not happen to preserve the Elliott count.

Euro touched a low of 1.4288 and now seems to be struggling to recover from there. If one examines a cloud chart (which I try to do as little as possible but as they become more popular it's worth glancing at them), Euro has descended down to the bottom of the cloud. However, since it entered from above, this is still bullish and supports the ABC correction theory.

However, there is another way to examine the price action from 1.1876 and that is as a large correction, made up of a double zigzag. I have marked the letters for this correction, a double zigzag, on the daily chart below and this fits in with weekly price action as well which is a big plus in my mind. If this is true, then there is a big drop ahead as we'd be in a third wave.

This just goes to show how loopy Elliott Wave can be if you attempt to use it as a trading tool. However, it can be evidence and it can indicate market psychology. The nice thing about either of these interpretations is that unless the 4th wave discussed above is complete, the most likely scenario is for additional moves down under either interpretation.

Looking at possible support, regardless of Elliott, when the price dipped to 1.3970, the 100-daily SMA held as support. Currently, the 100 is at 1.4143. That is very close to 50% of the move from 1.3429 to 1.4942 (1.4186) and .382 of the move from 1.2874 to 1.4942.

For resistance, the high today is 1.4404, just completed on the hourly chart. That was just above confluence but it was also a doji. Above that is 1.4450 and 1.4500. At that point, price would have regained the broken, short-term, hourly uptrend line.

Here's the daily chart:

© Dianne Fecteau, 2011. 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, June 10, 2011

EURUSD—met H&S price target

Euro met the head and shoulders price target of 1.4419. In doing so, it has dropped to a low of 1.4402, breaking below both a descending triangle on the hourly chart and a short-term uptrend line. My short position, even from the poorer entry of 1.4581, has done well and is still on. Still, this is near support so some profit-taking at +170 pips is in order. A .382 pullback of the current move up was at 1.4419 and the monthly pivot was at 1.4445.

The next target is the .50 retracement at 1.4334. A close for the week below 1.4378 is bearish.

Here is the hourly chart:




















© Dianne Fecteau, 2011. 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, June 9, 2011

EURUSD—hourly head and shoulders

I shorted yesterday at 1.4644 but moved my stop too quickly and was taken out at break even. I shorted again at 1.4581 and while price so far is dropping, I would not start filling out deposit slips yet.

Still, there are some bearish signs. I wrote yesterday about an Elliott double zigzag that topped at 1.4942. On the hourly chart, a confirmed head and shoulders pattern is in place. The neckline was 1.4558 and the potential price target is 1.4419. Price has touched 1.4478 so it is not that far away. The 1.4419 target ties in with both a .382 pullback of the current move up at 1.4419 and the monthly pivot of 1.4445. Beyond that target is a .50 retracement at 1.4334. A short-term uptrend line on the four-hour chart comes in at 1.4326.

If this head and shoulder pattern should fail, then it would be wise to remember that such patterns often are part of an Elliott expanded flat and price could move up quite nicely. A move above 1.4734 (.786 retracement of the move down from 1.4942) would make this more likely.

Here is the hourly chart:















© Dianne Fecteau, 2011. 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, June 8, 2011

GBPJPY—dropping

My short stopped out at +20 so I'm glad I took some profits when it was up at +68 pips. On the daily chart, the pair has dropped below the uptrend line from the March 16 low (see yesterday's blog). The low so far is 130.61, just a bit below Friday's low of 130.67. The May low of 130.29 is next, unless it can rally. Unless this is a fake-out, it's probably best to short rallies. There is positive divergence on the four-hour chart so a bounce may be in the works.

Resistance is at 132.08, 132.77 (June high) and 132.95/133.03/133.25, the 20- and 10-weekly EMA and 100 daily SMA respectively. After that are 134.50 (the daily chart downtrend line) and the May high of 135.14.

© Dianne Fecteau, 2011. 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—near strong resistance

Euro is approaching strong resistance and looks as though price action might be bearish around 1.4720. On the daily chart, one can trace out an Elliott Wave corrective count with the double zigzag peaking at 1.4942. If the pair closes above 1.4734, this count will be invalid. This would be .786 of the move down from 1.4942 and would suggest further price moves up. However, the lovely thing here is that one can short and have a tight stop since the market would be giving a strong message with moves higher than 1.4734. If anyone reading this is long, tighten stops and possibly take some profits.

Beginning on May 26, yesterday was the eighth bar of a Tom DeMark sell setup with today being the ninth candle. The candles since the 1.3970 low have been robust—they have opened near the low and closed near the high so this is bullish. Price has also exceeded the .618 retracement of the move down from 1.4942. However, the bullishness may be close to a point where a consolidation would make sense. A .382 pullback would bring prices down to 1.4419 (close to the monthly pivot of 1.4445) and 1.4334 would be 50%. A move below 1.4300 would be very bearish.

On the four-hour chart (not shown), there is negative divergence with RSI—prices moving up but RSI moving down. My plan is to enter short and see how it goes.

Here is the daily chart:















© Dianne Fecteau, 2011. 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, June 7, 2011

GBPJPY—struggling

In line with my blog yesterday, I went long in GBPJPY at 131.08. I've locked in some profits at +68 pips but I'd like to see the pair do better than this. As it is, it's struggling with the 132 area, having reached a high of 132.08 this morning. That is only one pip higher than yesterday's high of 132.07. The .618 retracement of the move from 130.29 to 135.14 is 132.14.

One can trace out a five-wave decline on the hourly chart and, if this is so, the pair should be in a C wave with a potential high of 132.45 (where C would equal A) and 133.46 (where C is 1.618 that of A).

Resistance is at 132.08, 132.77 (June high) and 132.95/133.03/133.25, the 20- and 10-weekly EMA and 100 daily SMA respectively. After that are 134.50 (the daily chart downtrend line) and the May high of 135.14.

Support is at 131.89/71 (daily 200 SMA and the low for the prior two hours), 130.67 (Friday's low), and 130.29 (May low). Below 130 would likely see additional price drops.

Here is the hourly chart:















© Dianne Fecteau, 2011. 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, June 6, 2011

GBPJPY—Friday doji

The Guppy dropped to a low of 130.67 on Friday, closing the day with a dragonfly doji. This can be a bullish signal as it means price had lower lows but price closed at the high of the day. Usually, though, it is more bullish if it occurs after a rise in price rather than a drop. Price has been dropping since the May 31 high of 135.14. One could view it as a hammer since there has been a drop in price. Price in the 130 area has served as support on several occasions and 130.29 was the low for May. The combination of the doji and being at support is enough to say that if price drops below 130, there may be further weakening. However, one could take a long position below 131with a stop below the doji. I will be watching momentum on the shorter time frames (4- and 1-hour) to see if I want to get into this trade.

If price manages to rally, resistance is close by at 132.77 (June high) and 132.95/133.03/133.25, the 20- and 10-weekly EMA and 100 daily SMA respectively. This is also near a round number. After that is 134.32 and 135.14, the high for May.

Here is the daily chart:


















© Dianne Fecteau, 2011. 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, June 1, 2011

AUDUSD—nice drop

Aussie came through today, touching a low of 1.0603 a few minutes ago. A sustained close below 1.06 would be good news for the bears. I am bearish short-term but it is important to remember that the pair is still in an overall uptrend.

© Dianne Fecteau, 2011. 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—back at resistance

The Aussie drifted back to a high of 1.0753 overnight. Drifted is the correct word. The move did not have a lot of energy and one can see the lack of momentum in the diverging RSI on the one-hour chart. In doing this, it took out my short from yesterday at breakeven but I re-established it this morning at a better price.

As I wrote yesterday, on the daily chart, the picture appears corrective with a three-wave structure down to the 1.0441 price. The pair would be in the B wave. Given that the 1.0757 prior high was near the monthly 1.0746 pivot calculation as well as near the .382 retracement of 1.0724 (1.0257/1.1012), the fact that this is serving as resistance again this morning is significant.

It is true, though, that a pair that hangs around just below resistance can often break through it. Should it do so, the next resistance is at 1.0820 and then 1.0889. Support on the four-hour chart is at 1.0690 and 1.0634. The latter is the short-term support line but also at the 50% point of the 1.0257/1.1012 range. A break below 1.0600 opens up the possibility of
1.0567, 1.0441, and 1.0359.

Here is the one-hour chart:




© Dianne Fecteau, 2011. 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, May 31, 2011

AUDUSD—resistance

By any reasonable technical analysis on the weekly chart, AUDUSD is still in an uptrend. One could argue that the pair recently completed an ABC correction with the drop from 1.1012 to 1.0537 being leg A, the rise to 1.0889 being B, and the slump to 1.0441 being almost the point at 1.0414 where C would equal A. If this were true, then one would expect price to resume rising and to surpass the 1.1012 high. I do have price targets up to 1.14. However, the pair is stumbling a bit in a resistance area.

From the 1.0441 low, Aussie has reached a high of 1.0757. On the daily chart, the picture appears corrective with a three-wave structure down to the 1.0441 price. This rise, then, would be wave B, a remnant of the former trend. The high so far of 1.0757 is near the monthly 1.0746 pivot calculation as well as near the .382 retracement of 1.0724 (1.0257/1.1012).

I had a sell order on the table that was filled Friday at 1.0725. I have moved the stop to breakeven. A more reasonable stop would be just above the recent high (1.0757) but I have been out of the market for a few days and need to get my bearings back. I can always short again if this one stops out. If price moves above 1.0889, I expect that would mean the larger trend is resuming. Note that there is positive divergence on the four-hour chart.

If the price breaks below 1.0607, the downtrend line beginning at 1.1012 on the four-hour chart, support is at 1.0567, 1.0441, and 1.0359.

Here is the four-hour chart:














© Dianne Fecteau, 2011. 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—weekly and monthly

Last week, Euro closed above the downtrend line drawn from the 2008 highs. Price action today has moved above last week's high of 1.4325 to a high of 1.4424. The monthly chart shows an engulfing candle forming (outside bar) with a higher high and lower low than took place in April. This is occurring after four monthly candles with higher highs and higher lows. This is a warning of a possible trend change. The pair is also stuck in a confluence zone so it needs to move above 1.4490 to gain some real upward traction.

Look for support at 1.4194 (the downtrend line from the 2008 high) and 1.3969 (last week's low). Resistance is 1.4424 as well as 1.4490.

© Dianne Fecteau, 2011. 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, May 27, 2011

Blog will return Tuesday 31 May

Have a happy and safe Memorial Day weekend.

Wednesday, May 25, 2011

EURUSD—small bounce

Yesterday, I traced out the move down from 1.4346 as being impulsive with the price action rise from 1.3970 possibly being a 4th wave. That wave topped at 1.4133 and price began to decline but only got as far as 1.4014 (two candles on the hourly chart were at that low). Since then, price has risen again with two candles topping on the hourly chart at 1.4094. Calculating this as an ABC correction from 1.4014 with A topping at 1.4093 and B dropping to 1.4044, results in 1.4093 being .618 of the A wave. Wave C would equal A at 1.4123 and would be 1.618 of A at 1.4173. However, if it continues to the latter two levels it is solidly within the resistance zone I wrote about yesterday of 1.4106 to 1.4162. In addition, an inviolate Elliott rule is that wave four cannot enter wave one's territory and that would be no higher than 1.4139. Therefore, resistance is at 1.4139. Beyond that, is 1.4233 and 1.4346.

The highest probability appears to be another move down. Note, though, that the pair is forming an ascending triangle on the hourly chart.

On the daily chart (not shown), the 1.3970 low formed a hammer so a drop below would be bad news. Support is at 1.3970, 1.3937 and 1.3863. 1.3521 is the daily uptrend line from last June.

Here is the hourly chart.















© Dianne Fecteau, 2011. 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, May 24, 2011

EURUSD—resistance

Euro, after dropping to a low of 1.3970, has bounced to a high of 1.4119. Here it is struggling with a strong resistance zone of 1.4106 to 1.4162 that previously served as support. The .382 retracement of the move from 1.2874 to 1.4942 is at 1.4153.

On the hourly chart, price action looks impulsive with the rise to 1.4124 a possible fourth wave.

Note, that on the daily chart (not shown), the low formed a hammer so a drop below would be bad news. Support is at 1.3970 and 1.3863.

Here is the hourly chart.
















© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

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

AUDUSD—daily chart

Aussie is drifting down within the downward sloping rectangle. The low so far is 1.0480 although it bounced a bit from there to 1.0580. On the hourly chart, the price action looks somewhat sluggish. The low of 1.0480 was below the .382 retracement of the move from .9706 to 1.1012. However, as I blogged last week, there is support in this area. The retracement of .382 of the move from .9537 to 1.1012 is 1.0439. The C leg equals the A leg of the ABC correction at 1.0414. The weekly S1 pivot calculation was 1.0444. The price objective from the triangle last week on the hourly chart was 1.0443.

The 50% retracement of 9706/11012 is around 1.0353—that is a good possibility if prices sink below the 1.0480 low. On the hourly chart, that low resulted in a hammer. The lower boundary of the rectangle is currently at 1.0293.

From a bullish perspective, this entire price action could be a bull flag on the daily chart. If so, price can still sink to the bottom of the flag (the downward sloping rectangle) at 1.0293 before rallying. There is still a long-term uptrend line in play from last June with a second touch in March. However, the market is clearly readjusting.

Here is the daily chart:














© Dianne Fecteau, 2011. 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, May 23, 2011

Sorry about no posts today

I'm working on a project and just didn't have the time. I'll be back tomorrow.

Friday, May 20, 2011

EURUSD—weaker

It appears as though 1.44 is a struggle for the Euro. The high was 1.4336 in the last hourly candle. Euro then dropped to a low of 1.4212, breaking below what may in fact be a bear flag on the daily chart. Target of the flag is a heart-stopping 1.3350. That is a bit far away to get excited about, especially since there are significant support levels before that. The nearest one is a strong confluence zone at 1.4169/28. Additional support is at the May 16 low is 1.4067, then 1.3890, the .382 retracement of the move up from 1.2874.

If the pair is going to rally, it needs to overtake 1.44. However, the first target to get excited about is the channel from the beginning of the year at 1.4671.

Yesterday I went long at 1.4237 and was stopped out at +40 pips—another insignificant trade. As I blogged yesterday, where does one decide to get back in? Since the pair is now throwing off signals that it is weakening, I will most likely look for short entries. The lower boundary of the bear flag at 1.4246 is one possibility but I will be keeping an eye on momentum. If the pair breaks 1.4200, that is another sign of weakness.

Here is the daily chart:















© Dianne Fecteau, 2011. 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, May 19, 2011

EURUSD—1.44 in site

Yesterday, I wrote that 1.4319 was a likely target and Euro touched 1.4307 last night before falling back to a low of 1.4207, thus taking out my long position I had established at 1.4188. I probably should have left the stop at breakeven—19 pips isn't worth waking up for—but that's neither here nor there. The question, once taken out, is does one get back in? If so, where? It always amazes me that traders who get stopped out don't have a clue as to the answers to these questions.

On the short, three-hour chart, I think it's possible the Euro can get to 1.4400 but it seems as though it's going to be a long grind. The high last night of 1.4307 was only 20 pips higher than the day before. Obviously, there is some pressure on the pair. However, as long as the Euro stays above 1.4261, higher highs are possible. 1.4390 is .382 of the move down from 1.4942 to 1.4049 and 1.4342 is .618 of the move down from 1.4588. 1.4440 is 1.618 of the A leg of the ABC correction I wrote about yesterday. Moving right along the upper boundary of the rectangle on the three-hour chart, the boundary hits a confluence point around 1.4386. So, I entered long again earlier this morning, albeit at a much less attractive price than yesterday (1.4237 versus the prior 1.4188).

© Dianne Fecteau, 2011. 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, May 18, 2011

EURUSD—resistance

The Euro touched a 1.4287 high late last night, just above the weekly 10 EMA of 1.4261. As I wrote on Monday, the weekly 10 EMA has been support since early March. Now it looks as though it may be serving as resistance.

On the three-hour chart, the pair might be in an ABC correction beginning with the low of 1.4049, going to A at 1.4244 and B at 1.4124. The potential price for C is 1.4245, 1.4319, or 1.4440. Of the three, I like 1.4319 (where C equals A) since that equates with 1.4326 which would be the top of the rectangle. This is also near a .382 retracement of the move down from 1.4548.

Support is at 1.4121 and 1.4049.

I went long yesterday at 1.4188. Obviously, I have moved my stop to breakeven.

Here's a three-hour chart.













© Dianne Fecteau, 2011. 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—hourly chart

Aussie broke above the triangle yesterday to a high of 1.0665. This was just above former short-term price resistance and price is now drifting downward and has almost reached the extended line of the triangle from yesterday's hourly chart.

This may serve as support (at/above 1.0559) or it could have been a fake-out move. If price bounces from there, it's a failed pattern (at least from the Elliott perspective) and could be the basis for some good gains. However, one will want to watch momentum if trading on this short time-frame.

One can look at this entire mess from the price high of 1.1012 as a complex correction, a double from an Elliott perspective.

Support is still present in the 1.05 area. A retracement of .382 of the move from .9706 to 1.1012 is 1.0513 and that same price is the monthly S1 pivot calculation. The weekly 10 EMA is 1.0533. There is also the psychological 1.05 round number.

Beneath 1.05 is also good support down to 1.04. The retracement of .382 of the move from .9537 to 1.1012 is 1.0439. The C leg equals the A leg of the ABC correction at 1.0414. The weekly S1 pivot calculation is 1.0444. The price objective from the triangle itself is 1.0443. After 1.04 is 1.0359, (50% of .9706/1.1012).

Resistance is 1.0665, then 1.0717.

Here is the one-hour chart:
















© Dianne Fecteau, 2011. 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.

Trouble posting

Ever since my main computer upgraded to IE 9, I'm having a lot of trouble posting.

Tuesday, May 17, 2011

AUDUSD—triangle

Aussie is still below its broken trend line. The dip to 1.0514 took it slightly below last week's hammer low of 1.0537. This is not good. It is currently coiling within a symmetrical triangle. Symmetrical triangles are often continuation moves although they do not have to be. From an Elliott perspective, a triangle always resolves with price action continuing in the direction from which it entered the triangle, downward in this case. Looking at price behavior from the high of 1.1012, an ABC correction is taking place, with the C wave unfolding. The potential price for the C wave is 1.0595 at .618 of A, 1.0414 where it would be equal to A, and 1.0120 where it would be 1.618 of A.

There is some good support in the 1.05 area. A retracement of .382 of the move from .9706 to 1.1012 is 1.0513 and that same price is the monthly S1 pivot calculation. The weekly 10 EMA is 1.0533. There is also the psychological 1.05 round number.

Beneath 1.05 is also good support down to 1.04. The retracement of .382 of the move from .9537 to 1.1012 is 1.0439. The C leg equals the A leg of the ABC correction at 1.0414. The weekly S1 pivot calculation is 1.0444. The price objective from the triangle itself is 1.0443. After 1.04 is 1.0359, (50% of .9706/1.1012).

Triangle resistance is 1.0604. There should be one more move up to this price before prices break downward (if they are going to break downward). Short-term price resistance is at 1.0642 and then 1.0717.

Here is the one-hour chart:













© Dianne Fecteau, 2011. 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, May 16, 2011

EURUSD—key support

The Euro dipped below a daily key support range of 1.4115/84 with its dip to Friday’s low of 1.4067. It closed at 1.4118 which is just within the range. The prior price low on April 18 was 1.4157.

On the weekly chart, the close was between the 10 (1.4261) and 20 (1.4041) weekly EMA. The 10 EMA has been support since the week ending 4 March 2011. Notably, price broke the weekly uptrend line drawn from January and RSI dipped below its uptrend line. Trend line breaks are a warning. In addition, it’s a nice ABC correction, chart wise (however charts don’t make the moves).

If price can’t stabilize here, then the break of the weekly EMA 20, price support, and the psychological 1.40 leads to a major support zone from 1.3852 to 1.3908. There are several components to this support zone. 1.3908 is 50% of the move from 1.2874 to 1.4942 and 1.3902 is the weekly pivot S2 support. 1.3862 was .618 of the move down from the Nov. 2009 high of 1.5144 to 1.1876. 1.3852 is parity. All this will make for a very strong support zone. If this zone breaks, then 1.3500 is possible. That would be at the uptrend line from the 1.1876 low in June 2010.

Here’s the weekly chart:
















© Dianne Fecteau, 2011. 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.

Week High, Low, Close

Tuesday, May 10, 2011

Traveling

I'm traveling the next few days so won't get much chance to post. I will be at the MTA conference on Thursday and Friday in New York so I'll post some tidbits from the presentations there.

Monday, May 9, 2011

USD Index—Weekly

Last week was a nice bullish engulfing candle for the USD. One could make the case for the recent low of 72.69 being an Elliott wave two. This would suggest that the price behavior for the last two years from the 89.63 high was a complex, double zigzag correction (WXY). One could also argue against this, i.e. the move that ended at 88.66 was an ABC correction with the downtrend now resuming.
Another way to look at the weekly chart is as a contracting rectangle. I like this interpretation as it is simple, in line with Occam's Razor. The top of the rectangle is at 88. However, whether one chooses the optimistic Elliott interpretation or the rectangle one, the next move should be up. If the buck can climb above 75 then next resistance is at 75.82, then 78.87 and 81.45. Support is obviously the recent low of 72.69, then 71.31 and 70.67.

Here is the weekly chart:











© Dianne Fecteau, 2011. 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.

Weekly High Low Close

Friday, May 6, 2011

AUDUSD—3-hour price

On the regular 3-hour price chart, the Aussie formed a hammer candle at the low. However, it broke its uptrend line on the way down and I take trend lines seriously. Nonetheless, based on the hammer and the P&F chart support I blogged about below, I bought yesterday at 1.0618. Note, though, that it's at the short-term downtrend line resistance. This could be 4th wave, the remnant of the prior uptrend. Time to take a little off the table in the way of profits.

Here's the three-hour chart:











© Dianne Fecteau, 2011. 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—P&F

On my three-hour point and figure chart (P&F), the 45° internal support line held yesterday's drop to 1.0537.
A P&F chart shows only price change and disregards time. Because the chart does not change unless price changes by a predetermined amount, many see these types of charts as a way of depicting uncontaminated supply and demand. There is also a belief it shows volume indirectly since price does not usually change unless there is volume behind the change.

The "X" column means price is increasing; the "0" column, that it is decreasing. The 45° support line is more objective than trend lines drawn on regular price charts (at least according to aficionados of the method).

I find the use of P&F charts valuable but use them as an adjunct to my other approaches.

Here is the 3-hour chart for the AUDUSD. I draw it on a closing basis for the three-hour period. One can see that the The 45° support line held nicely and the pair has rallied. This line was also at the point of a triple breakout on the chart. Resistance on this chart is now at 1.0950.













© Dianne Fecteau, 2011. 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, May 5, 2011

EURUSD—nearing major support

Most recent low is 1.4654. The 38.2% retracement of the move from 1.4157 to 1.4882 is 1.4605; 50% retracement is 1.4520. The April congestion zone was also around 1.4520. The annual pivot calculation for R1 is 1.4683. The monthly pivot is 1.4584; weekly S1 is 1.4573.

What this means is the Euro is in a strong support zone from here down to 1.4520. That's 130 pips below the most recent low so the zone is rather large. However, it also means that it could base anywhere in this zone. Obviously, if it breaks 1.4520, it's huah for the bears, especially if there is a weekly close below here.

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

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

AUDUSD—weekly support

Weekly support from the steep uptrend line drawn from .9706 is 1.0647. The most recent low is 1.0643. A break below this opens up 1.0570 and 1.0444.

It's also possible the pair will base here. Watch momentum on the shorter-term charts. For example, on the one-hour chart, there is positive divergence with RSI.

Wednesday, May 4, 2011

EURUSD—Coiling

On the three and one-hour charts, Euro is coiling in a symmetrical triangle. From an Elliott point of view, a triangle is a continuation move with a price target around 1.5015. Note that there would be one more leg down on this triangle to complete the E leg. Thus, one could go long if it reaches this, around 1.4790.

There is short-term negative divergence with RSI on the three-hour chart, although longer term, price and RSI remain in an uptrend together. The triangle also followed a broadening pattern. Broadening patterns after highs are often deadly. However, the combination of the broadening pattern and the triangle result in a rough diamond pattern. If this is a diamond, subsequent moves are usually rapid.

Support is at 1.4790, 1.4728/11, 1.4689, 1.4639, 1.4528 and 1.4496. First resistance is 1.4902, then 1.4961 and 1.5000/15. After that, there is 1.5105/16, 1.5163 and a potential price target at 1.5163.

Here's the three-hour chart:












© Dianne Fecteau, 2011. 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.