Tuesday, April 12, 2011

USDJPY—monthly chart

USDJPY fell to 83.47 over night but has since rallied a bit. On the monthly chart, the pair fell from a multi-year triangle in 2009. If one tries to interpret the price target from this based on an Elliott perspective, it's too low to be meaningful (well, it would be meaningful if it happened but it's not realistic from today's vantage point). One could estimate a wave five price target at 62.76 (gulp) if golden section calculations are used.

Interesting is the fact that if you look at the AB=CD harmonic, the 1.27 extension of CD is 76.19. This is based on A beginning at 147.63 and ending at 101.22 (4,641 pips) and C beginning at 135.14. 4,641 times 1.27 equals 5,894. Subtracting that from 135.14 brings it to the 76.19. The pair hit a low of 76.45 in the most recent dip.

Also interesting is the symmetry of the move from 147.63 to 76.45. It's almost, not quite, a three-drive pattern, a harmonic pattern that can signal a trend reversal. Note the positive divergence with RSI on this chart and the hammer at the recent low. These three together suggest higher prices may be coming. For that to happen however, the pair must first overtake the long-term downtrend line. It also needs to overcome resistance at 85.54, 85.93, 90.00 and 94.99.

Here's a monthly chart. I'll post a weekly chart later.

© 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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