I shorted yesterday at 1.4644 but moved my stop too quickly and was taken out at break even. I shorted again at 1.4581 and while price so far is dropping, I would not start filling out deposit slips yet.
Still, there are some bearish signs. I wrote yesterday about an Elliott double zigzag that topped at 1.4942. On the hourly chart, a confirmed head and shoulders pattern is in place. The neckline was 1.4558 and the potential price target is 1.4419. Price has touched 1.4478 so it is not that far away. The 1.4419 target ties in with both a .382 pullback of the current move up at 1.4419 and the monthly pivot of 1.4445. Beyond that target is a .50 retracement at 1.4334. A short-term uptrend line on the four-hour chart comes in at 1.4326.
If this head and shoulder pattern should fail, then it would be wise to remember that such patterns often are part of an Elliott expanded flat and price could move up quite nicely. A move above 1.4734 (.786 retracement of the move down from 1.4942) would make this more likely.
Here is the hourly 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.