At the beginning of January, I wrote that, "1.0307 is the top upward line drawn on the weekly chart below. There was an inverted head and shoulder pattern on the daily chart (not shown) that I blogged about in November. Its target is 1.0371".
It would be logical to see some correction as this is at or nearing strong resistance. In addition to being near price targets, 1.0333 was the 7/82 high. Calculating the weekly pivot point finds RS at 1.0369. Therefore, while there may be additional moves up to the 1.0370, a correction may kick in at any point. A correction could cause price to drop to 1.0080/65 (near the .382 retracement of the move up from .9706) or parity. Only if the pair drops below .9706, do possibilities that are more bearish come back into play. It's worth noting on the weekly chart below that there is still negative divergence with RSI.
The next potential target is 1.05 near the upper boundary drawn on the weekly chart below (the same line that targeted 1.0307) and a price target zone from various calculations.
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.
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