The pair has touched a low of .9269, .618 of the recent move up and the point where it took out my long position at breakeven.
Now I need to decide whether to enter again at .9300. The potential loss is 100 pips. Resistance is at .9360, .9506, .9586 and .9650. Only .9506 offers a decent 2:1 risk reward ratio but I can set a breakeven stop with a move of 30 pips or so. I can also watch price action at the .9300 mark and see if momentum provides a better clue. The reason I'd consider getting back in is the reason I went long in the first place. The dollar may have touched an important low. In additon, it looks as though the .618 will hold. We'll see.
© 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.