Last week was the fourth week with lower highs. Obviously, last week's price action created a doji candle with a long lower shadow. The shadow's low of 122.71 dipped well under the weekly downtrend line that the pair broke above nine weeks ago but the close at 130.83 was above that line. The short-term view is that perhaps the long, secular downtrend has resumed. However, note that the pair didn't spend any time at the 122.71 low and bounced sharply. In additon, momentum, as represented by RSI, looks good.
Price action, this morning, is choppy. Immediate resistance is at 132.50. A close today below 130.83 would be bearish.
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.