GBPJPY—rally

My short from 134.02 profit-stopped out at 133.91 (+11 pips, barely worth bothering with).

In early morning London trading the pair spiked to 134.59 before falling back. I was awake, trying to catch up on some analysis after being out of town part of last week. I watched the Guppy immediately fall but around the 50% retracement point of the move up from yesterday's low it hesitated.

I bought at 133.91 (the same price I'd been stopped at in the other direction but I didn't notice that until just now). My reason for doing so, besides the hesitation, was that momentum wasn't supporting the move down from Thursday's high. Also, this pair had violated a long term resistance line and that's a powerful hint things may be changing. So I'm long. After I bought the pair spiked down a bit more, almost to the .618 retracement of the move up from yesterday. After that it resumed its rally, so far reaching 134.97.

Support is at 1.3319 (yesterday's low) and then there's a zone of support down to 132.00. Below that is 130.01.

Resistance is at 135.22, 136.24, and 137.79. After that there is little in the way of resistance until 141.19 (confluence) and then price resistance at 145.98, last April's high.

If one assumes this is an ABC correction off of 125.51, targets are 136.53 if wave C equals A and 140.86 at 1.618A. If one assumes a daily flag, the target is 136.25. So if I don't get stopped out (my stop is now slightly better than breakeven), I'll take partial profits in the 136 area.

Here's a 15-minute 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.