If you look at the monthly chart below, you can see that April tends to be an up month for Cable. I've marked the years above the April candle. This chart begins in 2001 so it is only nine years of data but the pattern goes back further than 2001. Think about it only as something of which to be aware.
Cable is still below the downtrend drawn from 2009. However, the pair broke above a long-term downtrend line from Nov. 2007 in February, closed below it in March and is above it again as of today. The pair needs to close above 1.6401 for this break to gain credibility.
Note the symmetrical triangle. These can be continuation patterns. From an Elliott perspective, they always are continuation patterns that occur in a fourth wave. If this is true, the width of the triangle is the price target for wave five. This would be 3,542 pips (1.3503 to 1.7045). It seems a bit much to contemplate at this point—way down in the 1.11 area.
If, instead of a triangle, one wants to look at this as an ABC correction, then wave C at .618 A would be 1.6400. Other approaches strengthen this resistance. The .382 retracement of the 2.1164/1.3503 decline is at 1.6430 and 1.6410 is R3 of the weekly pivot.
Above 1.6430/1.6500 would strengthen the case for a move to much higher prices. The August 2009 price high is 1.7045. A daily flag target I blogged about March 19 had a target of 1.7215. If this is an ABC correction and wave C equals A, the target is 1.7725.
On the support side, 1.5345 is the most recent swing low. If one buys the Elliott triangle interpretation, leg D of the triangle would be 1.47 or so.
Here is the monthly 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.