The pair has had five solid weeks of higher prices so I'd expect some correction at this point. The pair is overbought on the daily chart and there's negative divergence on the one- and three-hour charts. The top of the upward channel is .9671 and the pair stalled at a high of .9644. As a result I took some partial profits at +701 pips. This doesn't mean I don’t think the pair can achieve the former .9851 high. But it's not going to do so in a straight line up and I can add another position later. Meanwhile, I've taken some nice profits.
The thing to watch for now is another attack on the .9645. If this fails then there is a possibility the pair will pull back a bit more, possibly to .9509, .9463 or .9373/54. Much below that would signal the possibility of further moves down to .9093 and have the bears out in full force.
If the pair can successfully scale .9644 then it's probably on track for a return to the 2008 high of .9851. Expect more stalling at .9750.
Here's the daily chart:
© Dianne Fecteau, 2010. 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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