Friday, February 25, 2011

Currency market today

In a recap of the week so far as of 9:30AM EST:

AUDUSD has moved from a low of .9968 on Tuesday to a high of 1.0152 so far today, the highest price since last Friday's 1.0058. While price action has been choppy this week, the pair has managed to stay above parity for the most part. There have been only two closes below parity the entire month. The current price action is at resistance but should it make it through, next resistance is at 1.0200 and then of course 1.0257. Beyond that, one can assume that the longer-term uptrend is resuming. Only below .9804 would the bears begin to get excited and below .9537, there'd be blood in the streets. Obviously, the pair is well above those levels despite bearish candle formations on the longer-term charts.

EURGBP reached a high of .8593 this morning, its highest high since February 1. Beyond this is resistance at .8649/72, .8818 and .8941. On the daily chart, this could be shaping into a triple top (.8649 on 12/31; .8672 on 1/26). However, confirmation of the triple top won't come until price drops below .8285, quite a ways down and with some good support in the way. Nearest support is .8531 and .8500.

EURJPY is in a corrective pattern and yesterday formed a doji candle with a low of 112.20. This pushed it below the 10- and 20-day moving averages. It's still above the 50-, 100-, and 200-day averages and above the long-term downtrend line on the weekly chart. However, bulls are waiting on moves above 115.69 in the short-term and then 119.66. On the downside, 106.83 and 105.44 are the support levels to watch as a close below would signal resumption of the longer-term downtrend. Near-term support is quite a bit above those numbers at 111.24, 110.77 and 109.58.

EURUSD really needs to climb above the February 1st high of 1.3862. It's trying. The high yesterday was 1.3838. A close above 1.38 this week would be bullish. 1.3700 is the first support level to watch—the low so far this morning has been 1.3743. After that is 1.3650 and then 1.3594, 1.3524, and 1.3429, the low for the month. Obviously, bulls are hoping to see 1.40 sometime soon. Next week's price action should be interesting.

GBPJPY is still above a long-term monthly downtrend line but has dipped below the 200-day moving average today with a low, so far, of 131.38. The low for the month was 1.3091 on February 1st. This week has seen choppy price action in many pairs and this one is no different. The pair made a new high last week at 135.54 so there is bullish price behavior to contend with even though the pair is currently correcting. I'd expect 129.25 to contain the correction (.618 of the move up from 125.51) and before that is the prior swing low at 129.52. Resistance is at 135.54, 136.24, and 137.79.

GBPUSD has had a higher close each week this month and this is bullish as long as it holds above 1.5963. However, there's a potential for a double top formation with the high of 1.6300 in early November and the high of 1.6282 in early February. The high this week has been 1.6276. There is no confirmation of the potential double top until price broke below 1.5345, quite a ways below here. If cable can maintain its bullish behavior, expect to see 1.6300, 1.6461 and 1.6878.

USDCAD continues to sink. The low so far this morning is .9796. Support is at .9771 and then .9711, the 2008 low. Below that there's not a lot stopping it until it reaches .9417. The triangle price target was .9549. The only good thing you can say is that if you want to try a long position, the stop can be very tight. Resistance is at .9960 and 1.0058.

USDCHF is another suffering pair with a low yesterday of .9234. This has broken below most reasonable projections of support. I prepared charts earlier this year that show it could get to 90 and it seems to be on its way. The weekly high was .9506. One needs to see a move above that to believe it's recovering but until it can climb above .9784, there's not a lot to say.

USDJPY: The month's high was 83.97, reached the 16th and the pair has been dropping since then with a low so far this morning of 81.66. This is near key support at 81.35. Below this is 81.10 and 80.24. 83.91 is likely to be resistance, the downtrend line of the monthly wedge pattern.

© 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.

Thursday, February 24, 2011

GBPUSD—approaching support

Cable hasn't closed beneath 1.61 since the 14th and its low has stayed above 1.61 since last Friday (although it was within two pips of it yesterday) so as it approaches the support of price and the two uptrend lines from January, I might look at a buy. The stop can be tight. The potential targets are 1.6276/83, 1.6300, and 1.6465.

A close below 1.6100 suggests support at 1.6033, 1.6008/00, 1.5965/44, 1.5832/10 and 1.5747.

Here's the three-hour 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.

EURJPY—weakness

One can see that the daily flag hasn't quite panned out. It looks as though EURJPY is correcting but for now the 112 area is holding and has been since the 8th. A break below here targets 111.24 and 110.77 at which point I'd most likely buy. Until that happens, one has to assume a consolidation but a break below both price and RSI on the daily chart suggests lower prices. 115.69 is still the upside number to watch.

Here's the daily 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.

AUDUSD—working out divergence

On the hourly chart, one can see a completed AB=CD pattern with a pullback to about the .618 of the A to D range. This comes after a positive divergence between price and RSI so I'd expect at least a slight rally. Price has overtaken the short-term resistance line and recent high of 1.0083. I went long at 1.0068 but don't have a lot of faith in it and have moved my stop to breakeven. We'll have to see how far it goes. Next resistance is 1.0137/58, then 1.0200.

Here's 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.

AUDUSD—sideways

Aussie had a higher high and higher low yesterday but is still within sideways action largely around the parity level. Since January 31 there have been seven lows below parity, most above 99.60. There has only been two closes below parity in that same period of time, both within seven pips of parity. As to the upside, the high for February has been 1.0200 back on the 4th and while it has come close (yesterday's high was 1.0079) so far no cigar. The bulls need to first sustain a close above 1.0200. On the downside, .9950/16 is the line in the sand.

If the close over 1.0200/57 happens, the longer-term probability is for the pair to break above the daily triangle. It make also be possible for the pair to approach the top of the upward sloping rectangle. However, before that happens, sideways activity could continue another several days. One thing to keep an eye on is RSI. On the daily chart, it's nudging below the uptrend line. Similar action on price makes this a concern.

Here's the daily 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.

USDJPY—dropping

My long from 82.73 stopped out at -40 pips. Price action has carried down such that it's back inside the breakout above the resistance down trend line from July of last year and is approaching the downtrend line from June at 81.40. This is also near the uptrend line of the roughly sideways or triangle action that has been containing price action since the beginning of November. Let's see what price does there.

Support is at 81.40/35, 81.12, 80.94 and 80.31.

© 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.

Wednesday, February 23, 2011

EURUSD—approaching resistance

Euro is approaching resistance near 1.3750, composed of price (Feb. 9th high of 1.3744), confluence, a downward trend line, and a speed line. It's possible it will fail here. If so, look for support at 1.3650, 1.3526 and 1.3429. Above 1.3750 opens the possibility of 1.3862. Only above here can a strong bullish case be made. Watch momentum on the shorter time frame charts.

© 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.

AUDUSD—weak

While there's not much to add to the daily analysis from yesterday, Aussie closed two pips higher than Monday's close with a lower high and lower low than Monday. This is weak behavior after Monday's disappointing price action. Watch the boundary of 1.0013—it has dipped below there this morning. A close below .9968 would be very negative.

Resistance is at 1.0158/80 (last week's high, trend line), 1.0257, and 1.0300.

Support is at .9985, .9968/44, .9916, and .9896/88.

No chart until there's more definitive price action.

© 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.

USDJPY—caution

While it would be safest to trade this pair at the extremes of the sideways range, I bought this pair yesterday at 82.73. My reasons were that this was near the 82.73 downtrend line of the bull flag drawn on the daily chart below. This was also not very far above the downtrend line from the July, 2010 high at 82.40. Finally, it was also near the 50% retracement of the move up from 81.12 to 83.97. A rally will bring the pair to resistance at 83.55, 83.97, and 84.51 (Dec. high). A possible price projection based on EW is 84.99 (wave v = wave i). At that point I'd look for a short position.

The price movement is taking place within a roughly sideways channel after a very long downtrend so it's possible price can collapse. However, note that the price is edging above downtrend lines. This suggests a period of reaction or consolidation before any downtrend resumes. The most recent range is between 80.94 to 85.07 so there's some room for upward price movement.

If the pair doesn't rally and drops below 82.40, additional support is at 81.12, 80.94 and 80.31. Note that if it drops below the rectangle, there's room for quite a nice move down based on the width of the rectangle. Bottom line here is that you must be cautious with this pair and inexperienced traders may want to sit it out until price approaches one of the two boundaries of the rectangle .

Here's the daily 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.

Tuesday, February 22, 2011

USDJPY—sideways

On the three-hour chart, the sideways range the pair has been in since the end of December is evident. This range is 80.94 to 85.07. Within that range the downtrend line from the 89.12, July 2010 high is coming in at 82.40. This is near the 82.73 downtrend line of the bull flag. The two of these should serve as support to the current move down. This is the price for a possible short-term long position.

If the pair rallies from this low, resistance is at 83.55, 83.97, and 84.51 (Dec. high). A possible price projection based on EW is 84.99 (wave v = wave i). This is within the range and I'd look to short there.

If the pair doesn't rally then look for support at 81.12 and 80.94.

Here's the three-hour 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.

EURUSD—daily

Towards the end of last week, Euro seemed to be heading up to a resistance line and reached a high of 1.3715 beofre closing the week at 1.3693. Yesterday, though, was a different story and price headed down. The low so far is 1.3526 this morning. It has since recovered to a high of 1.3684 in a series of bullish candles on the hourly chart. Here it once again is meeting an interim resistance line. The pair really needs to hold above 1.3612, the weekly pivot, for a bullish bias to prevail.

On the daily chart, I'm focusing on the upward sloping channel called a bear flag. Today's move down provided a second touch at the bottom of that flag. It's not unreasonable to believe price would now head upwards for another touch at the top which would be in line with longer range targets. However, the upwards price action last week and today has so far topped in the .618 region of the move down from 1.3862. Clearly, this 1.3716 area is the immediate resistance followed by 1.3862. Only above these is the bullish case stronger.

Support is the low of 1.3516 and 1.3479. Below that means the downtrend has been resumed and will open the door to much lower lows. Price action today should be telling.

Here's the daily 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.

AUDUSD—daily

Yesterday's price action resulted in a lower high (1.0135) and lower low (1.0009) than Friday. That was disappointing after four days of higher highs and higher lows. The low this morning was .9985.

Even with last week's bullish behavior, the pair still can't get above the 1.0257 high everyone keeps waiting for. Each time the pair approaches a high (1.0183, 1.0257, and 1.0200), there's a bearish candle pattern on the weekly chart (not shown). This pair continues to hit a low below parity each week even though it has managed to close above parity for each of the last three weeks.

A few characteristics stand out on the daily chart. First is the symmetrical triangle formation where point E has taken place. From the perspective of EW, this is bullish since triangles resolve in the same direction from which they were entered. In classical technical analysis, symmetrical triangles can be either a continuation or a reversal pattern. Whatever it is, they graphically show the struggle between buyers and sellers which becomes more intense over time. This increasing intensity causes the narrowing of the triangle and it represents doubt, uncertainty, and stalling. The time for it to resolve one way or the other is certainly approaching. 1.0180 is the upper boundary. There needs to be a sustained close above that for the resolution to be complete. Or a sustained close below the lower boundary of 1.0004 although below parity would be better.

Something else that stands out on the chart is the possibility of an ABC correction. There's also a potential topping pattern. As I've mentioned several times, these need a confirmation, first below .9804 and then .9537.

Finally, there's a confirmed uptrend in place. Much of the current price movement is in keeping with consolidation behavior and one can assume that uptrend will resume.

Still, there's negative short-term behavior so scalping is possible. The pair is below the weekly pivot price and on shorter-term charts there is some bearish behavior. However, the best approach for inexperienced traders is to stay out for now.

Resistance is at 1.0158/80 (last week's high, trend line), 1.0257, and 1.0300.

Support is at .9985, .9944, .9916, and .9896/88.

Here's the daily 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.

Monday, February 21, 2011

President's Day

No posts today because I'm away for the holiday weekend. Be careful as European session draws to a close as it's a holiday in the U.S. and the markets and banks are closed. See you Tuesday.