Tuesday, January 11, 2011

EURJPY—possible ABC correction

EURJPY has managed to stay above its low of 106.83, near a somewhat obscure fibo and near a round number (which the yen pairs seem to favor). On the daily chart (not shown), there was a harami candle yesterday which hints the market is vacillating. I'm still short from 109.27. I took partial profits at 160 pips just a few minutes ago.

The pair hasn't managed to get above 107.87 in what looks like an ABC correction on the three-hour chart. The A wave of this ran from 107.61 to 110.24 or 263 pips. From the 106.83 low, this means a target of 108.46 if C equals .618 of A, 109.46 if C equals A, and 111.09 if C is 1.618 A's length. I think 108.46 is most likely which is also near fibo confluence of 108.95. I'd probably re-establish a short position there as my profit stop would have been hit on my current short position. As I wrote yesterday, there's a cluster of resistance up to 109.00.

A support zone exists down to 106.24 (price lows, polarity, fib confluence). Below that is 105.83 (September lows) and 103.81.

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.

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