Why did I do this? As most of my readers know, I almost never bail out of profitable trades. One reason was that I distrusted the rate of the drop. Euro, yes, I could see it as well as in other pairs. But while AUDUSD was overextended, the only "problem" on the horizon was that sudden China interest rate drop and I began to believe this was only over-reaction to unexpected news. The other problem was the round number .9700 level. It seemed to be hesitating. Finally, I already had divergence on the 15-minute chart which was also true for other charts. In the first moves of a real drop down, one wouldn't expect to see this. So I went long and have just taken partial profits at +95 pips.
I don't think all is well here. The pair, on a weekly basis, had a lower low than last week so it's showing weakness. It also dropped below the .618 of the most recent move up chart. I'm just not sure the party on the upside is over yet and in this correction has already overcome minor resistance at .9718. I'll be watching the correction channel closely and will post again later. I may short rather quickly if things look like they're falling apart.
Here's the 15-minute 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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