I'm still long from 1.5419.
On the strong fundamental news, the pair surged through 1.60 this morning, only to be turned back by 1.6059. With that high Cable gained 249 pips since Friday's close which is 60% of the 414 pips it gained last week. And it's only Tuesday morning. A pullback should happen at some point and I will probably add to my long position. Negative divergence persists on the three-hour chart. However, it's possible for the pair to get to 163.00/40 before that happens.
A .382 of the current move would be 1.5780, very close to other support and a buy would be in order here.
If the pair peaks with the 1.6059 and begins to drop, it makes the head and shoulder pattern more likely which I wrote about yesterday. There's a bearish engulfing candle from November's monthly chart with the high of 1.6302. If the pair definitively closes above that, the candle is invalidated.
Support is at 1.5912, 1.5810. 1.5780, 1.5740/10 (prior resistance and uptrend line from last week's move), and 1.5686/51 (fibo of most recent move up, daily 10 SMA, and strong prior resistance). Below that is a strong range from 1.5567 to 1.5506 made up of fib confluence, moving averages, and price.
Resistance is at 1.6100, 1.6228, 1.6302 (the November high which was also the top of a monthly bearish engulfing candle), 1.6300 and 1.6348.
© 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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