Friday, June 24, 2011
Thursday, June 23, 2011
EURUSD—broke 1.42
A bit of battle between buyers and sellers went on between 1.4212 and 1.4236 but supply prevailed (so far) and has pushed Euro to a low of 1.4187. This is just below the June 20 low of 1.4192. It would strengthen the bearish case to have an hourly close below there.
© 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.
© 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—lower
Key resistance at 1.4428/50 held nicely. Euro broke below the uptrend line of the rectangle and the 21-SMA on the four-hour chart that I blogged about yesterday. The low so far this morning is 1.4235. This implies that the move up from 1.4074 was an ABC correction (A= 1.4074/1.4340; b=1.4340/1.4192 and C topped out close to the point where C would equal A).
I missed the break, having knocked off early yesterday to run around town checking out dog kennels for boarding our puppy. Sometimes the home front calls. However, a rally is possible, given that the current low is close to the 50% point of the move up from 1.4074 to 1.4442. The pair might rally to 1.4328 (the 21-SMA on the four hour chart) or 1.4381, the breakout point from the rectangle. Additional resistance derives from the weekly 10-EMA (1.4317), and two fib levels (.382 of 1.3429/1.4942 at 1.4364 and .382 of 1.4942/1.3970 at 1.4341). With a rally, I'd sell weakness. If the rally does not happen (and it might not if we're in a third wave), then I will enter on smaller rallies with weakness on much shorter-term charts.
However, it's important to remember that until price drops below 1.4074, thus creating a lower low, there is still resistance up to 1.4697.
© 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.
I missed the break, having knocked off early yesterday to run around town checking out dog kennels for boarding our puppy. Sometimes the home front calls. However, a rally is possible, given that the current low is close to the 50% point of the move up from 1.4074 to 1.4442. The pair might rally to 1.4328 (the 21-SMA on the four hour chart) or 1.4381, the breakout point from the rectangle. Additional resistance derives from the weekly 10-EMA (1.4317), and two fib levels (.382 of 1.3429/1.4942 at 1.4364 and .382 of 1.4942/1.3970 at 1.4341). With a rally, I'd sell weakness. If the rally does not happen (and it might not if we're in a third wave), then I will enter on smaller rallies with weakness on much shorter-term charts.
However, it's important to remember that until price drops below 1.4074, thus creating a lower low, there is still resistance up to 1.4697.
© 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, June 22, 2011
EURGBP—contrast with EURUSD
Contrast the EURGBP with the price behavior of EURUSD. On the four-hour chart, there is strong move up, especially with the last two candles. This pair, too, is rising within an upward sloping rectangle so it is time to take some profits on my long as it approaches that point. The longer, downtrend resistance line is coming in just above that boundary. However, note that unlike the Euro, momentum, as reflected in RSI, is also maintaining its uptrend line. It is interesting that on this pair, as with the Euro, the 21-SMA is tracking the lower boundary of the rectangle.
EURGBP offered clearer buying signals after weekend analysis than did EURUSD. For example, the week ending 17 June closed with a hammer candle near a support level in the context of what appeared to be a corrective move within an overall uptrend.
Resistance is at .8938/76 (monthly pivot R2, downtrend line, rectangle upper boundary, June 8 high) and .9044.
Here is the four-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.
EURGBP offered clearer buying signals after weekend analysis than did EURUSD. For example, the week ending 17 June closed with a hammer candle near a support level in the context of what appeared to be a corrective move within an overall uptrend.
Resistance is at .8938/76 (monthly pivot R2, downtrend line, rectangle upper boundary, June 8 high) and .9044.
Here is the four-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—hovering near key resistance
Euro managed to climb to 1.4434 within an upward sloping rectangle. On the four-hour chart, the 21 SMA is tracking the lower boundary of the rectangle. Key resistance is 1.4428/50. The fact that price is hanging around just below here is troublesome to bears—when price maintains a narrow range beneath a key resistance it often manages to break through. If it does so, there is psychological resistance at 1.45. After that is 1.4573—the upper boundary of the rectangle and the point where the downtrend line from 1.4942 comes in. Finally, there is key resistance at 1.4697, the prior high.
There does not appear to be strong momentum behind the pair, i.e. note that RSI has fallen below its uptrend line. If price falls below its uptrend line, that confirms weakness in the pair. Candles on the four-hour chart are exhibiting upper and lower shadows. This indicates indecision. There needs to be a strong move in one direction or another for traders to jump in and rev up the momentum.
Best approach for now is to wait for a clear sell or buy signal. As I wrote yesterday, a push to 1.45 or above on the hourly chart where RSI moves into overbought territory (above 70), followed by RSI closing below 70 would be a sell signal, especially if combined with a bearish candle formation. A strong move above 1.4573, especially with a retest, would be a buy signal. My suspicion is that price is in a third wave down in the larger period so I am more inclined to look for a sell signal. However, once I recognize this bias I have to be alert to not let the bias drive my trading and pay close attention to the chart.
Here's the four-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.
There does not appear to be strong momentum behind the pair, i.e. note that RSI has fallen below its uptrend line. If price falls below its uptrend line, that confirms weakness in the pair. Candles on the four-hour chart are exhibiting upper and lower shadows. This indicates indecision. There needs to be a strong move in one direction or another for traders to jump in and rev up the momentum.
Best approach for now is to wait for a clear sell or buy signal. As I wrote yesterday, a push to 1.45 or above on the hourly chart where RSI moves into overbought territory (above 70), followed by RSI closing below 70 would be a sell signal, especially if combined with a bearish candle formation. A strong move above 1.4573, especially with a retest, would be a buy signal. My suspicion is that price is in a third wave down in the larger period so I am more inclined to look for a sell signal. However, once I recognize this bias I have to be alert to not let the bias drive my trading and pay close attention to the chart.
Here's the four-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.
Tuesday, June 21, 2011
EURUSD—narrow range
Euro is wavering in one of those narrow ranges so far this week between 1.4291 and 1.4384, no doubt by short-term fundamental, kneejerk focus on Greece. This is under key resistance at 1.4428/50. Even if it rallies above there, it's doubtful it will get beyond 1.4697 but of course that is a lot of pips between the two.
I am out completely as of now. My plan is to wait to find a selling opportunity. To do this, I'll use resistance and momentum on the hourly chart. Ideally, I would like to see a push to 1.45 or above where RSI moves into overbought territory (above 70). I would then wait for an hourly close below 70 and short at that point. That combination should provide for a tight stop.
The more bullish possibility in the short term is that Euro may be tracing out a butterfly pattern on the daily chart. Given that the upward sloping rectangle on the weekly chart (see Monday's blog) constrains prices between 1.3564 and 1.5368, 1.5308 (1.27 of the XA leg) is within that realm of possibility. For this to be possible, price needs to clear 1.4942 and there would probably be momentum clues well before then that the move up was gaining strength.
© 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.
I am out completely as of now. My plan is to wait to find a selling opportunity. To do this, I'll use resistance and momentum on the hourly chart. Ideally, I would like to see a push to 1.45 or above where RSI moves into overbought territory (above 70). I would then wait for an hourly close below 70 and short at that point. That combination should provide for a tight stop.
The more bullish possibility in the short term is that Euro may be tracing out a butterfly pattern on the daily chart. Given that the upward sloping rectangle on the weekly chart (see Monday's blog) constrains prices between 1.3564 and 1.5368, 1.5308 (1.27 of the XA leg) is within that realm of possibility. For this to be possible, price needs to clear 1.4942 and there would probably be momentum clues well before then that the move up was gaining strength.
© 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, June 20, 2011
USD Index—monthly
I have not blogged about the dollar index recently. On the monthly chart, one can make the case for a move up from the bottom of the symmetrical triangle where it will find resistance at either the longer term downtrend line (80.47) or the upper boundary of the triangle at 88.49. The move from 89.63 down to 74.15 (1,548) had a nice balance with the move from 88.66 down to 72.69 (1,597).
Any drop below 72.69 would be bearish. It would also raise the possibility that there is a double top in with the confirmation point at 73.50. The price target would be 69.81. No doubt that would bring on the same tired response from the US Treasury that “we support a strong dollar.”
Nonetheless, given the potential weakness in the Euro and other currencies relative to the USD, I think a rally is more probable.
Here’s 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.
Any drop below 72.69 would be bearish. It would also raise the possibility that there is a double top in with the confirmation point at 73.50. The price target would be 69.81. No doubt that would bring on the same tired response from the US Treasury that “we support a strong dollar.”
Nonetheless, given the potential weakness in the Euro and other currencies relative to the USD, I think a rally is more probable.
Here’s 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.
EURUSD—weekly analysis
Euro is at a critical point on the weekly chart. The week ending 6/17 had a low of 1.4074 and formed a hammer candle on the weekly chart. Since 1.4074 is in a solid support zone, Euro needs to stay above this low. This support zone is drawn from pivot calculations, fib retracements and price. However, note that on the weekly chart below, it is also the area where the downtrend line from the 1.6041, 2008 high meets a shorter-term uptrend line from the 1.2874 low. Bears and bulls are battling it out here.
From the Elliott Wave perspective, price action does not look bullish on the weekly chart. There is a three-wave move from 1.1876 to 1.4283 and then another three-wave move from there down to 1.3970. Alternatively, one could say there’s an X joining the first three wave move at 1.2874 and a double zigzag beginning from 1.2874. If so, that might mean price action is in the C wave of the second zigzag and there could be additional moves up. Regardless, though, it is difficult to make the case that the move up from 1.1876 is impulsive. I am not enamored of Elliott—the best counts occur so after the fact—but it is something to consider as an indicator of market psychology.
From a strict pattern point of view, the upward sloping rectangle constrains price action to between 1.3564 and 1.5368. The top line of the rectangle is a duplicate of the bottom line as to angle. In rectangles, price gets batted back and forth until there is a clear break out of the rectangle, i.e. one side becomes overwhelmed by the opposing side. Price fell short of the top line at 1.4942. Sometimes this hints at the breakout direction, in this case down.
Note on the weekly chart that RSI has dipped below its uptrend line. This happened in conjunction with price breaking an uptrend line drawn from January (the red dotted line on the chart). That line had a steep angle of ascent and was bound to break but if one extends that line, price tested it as resistance at 1.4647. If price closes beneath the uptrend line from 1.2874, that would be bearish and would make the longer term uptrend line vulnerable for testing, just above 1.35.
Adding to this bearish picture is the fact that since the May high of 1.4942, there has been a lower low at 1.3970 and a lower high at 1.4697. In fact, regardless of trend lines, since July 2008, almost two years ago, there has been nothing but lower highs (1.5144 and 1.4942) and lower lows (1.2329 and 1.1876). That is a downtrend. While trends reverse, it hasn’t proven to reverse yet. The first clue would be taking out 1.5144.
On a more positive note, Euro is holding above support (the 45° trend lines) on both my daily and three-hour point and figure charts. That reinforces the price zone above 1.40 as support. If price breaks beneath 1.3970, look out below. That would also be near the 50% retracement of 1.6041/1.1876.
The weekly cloud chart shows Euro to be well above the cloud so that’s bullish for looking for buy opportunities on the daily (or shorter) basis.
Immediate resistance is 1.4428/50 (the daily, 50-SMA, the monthly pivot calculation, the .618 retracement of 1.6041/1.1876), 1.4512, 1.4683/97 and 1.4735 (.786 retracement of decline from 1.4942). Above 1.4735 would be very bullish.
Support is 1.4186/52, 1.4074, 1.3970/59/22/08 (prior low, 50% fib mentioned above, monthly 10-EMA, and 50% retracement of 1.2874/1.4942), 1.3831 (the 200 daily SMA), 1.3780/40, and 1.3675.
Here’s a weekly 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.
From the Elliott Wave perspective, price action does not look bullish on the weekly chart. There is a three-wave move from 1.1876 to 1.4283 and then another three-wave move from there down to 1.3970. Alternatively, one could say there’s an X joining the first three wave move at 1.2874 and a double zigzag beginning from 1.2874. If so, that might mean price action is in the C wave of the second zigzag and there could be additional moves up. Regardless, though, it is difficult to make the case that the move up from 1.1876 is impulsive. I am not enamored of Elliott—the best counts occur so after the fact—but it is something to consider as an indicator of market psychology.
From a strict pattern point of view, the upward sloping rectangle constrains price action to between 1.3564 and 1.5368. The top line of the rectangle is a duplicate of the bottom line as to angle. In rectangles, price gets batted back and forth until there is a clear break out of the rectangle, i.e. one side becomes overwhelmed by the opposing side. Price fell short of the top line at 1.4942. Sometimes this hints at the breakout direction, in this case down.
Note on the weekly chart that RSI has dipped below its uptrend line. This happened in conjunction with price breaking an uptrend line drawn from January (the red dotted line on the chart). That line had a steep angle of ascent and was bound to break but if one extends that line, price tested it as resistance at 1.4647. If price closes beneath the uptrend line from 1.2874, that would be bearish and would make the longer term uptrend line vulnerable for testing, just above 1.35.
Adding to this bearish picture is the fact that since the May high of 1.4942, there has been a lower low at 1.3970 and a lower high at 1.4697. In fact, regardless of trend lines, since July 2008, almost two years ago, there has been nothing but lower highs (1.5144 and 1.4942) and lower lows (1.2329 and 1.1876). That is a downtrend. While trends reverse, it hasn’t proven to reverse yet. The first clue would be taking out 1.5144.
On a more positive note, Euro is holding above support (the 45° trend lines) on both my daily and three-hour point and figure charts. That reinforces the price zone above 1.40 as support. If price breaks beneath 1.3970, look out below. That would also be near the 50% retracement of 1.6041/1.1876.
The weekly cloud chart shows Euro to be well above the cloud so that’s bullish for looking for buy opportunities on the daily (or shorter) basis.
Immediate resistance is 1.4428/50 (the daily, 50-SMA, the monthly pivot calculation, the .618 retracement of 1.6041/1.1876), 1.4512, 1.4683/97 and 1.4735 (.786 retracement of decline from 1.4942). Above 1.4735 would be very bullish.
Support is 1.4186/52, 1.4074, 1.3970/59/22/08 (prior low, 50% fib mentioned above, monthly 10-EMA, and 50% retracement of 1.2874/1.4942), 1.3831 (the 200 daily SMA), 1.3780/40, and 1.3675.
Here’s a weekly 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.
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