EURGBP—Monthly

The last two months have both resulted in doji candles within a corrective channel. Last week's high .8818 was lower than the prior week's high of .8941 but a slightly higher low of .8652 makes for an inside week. Indecision and what else is new? One could short with a stop above the channel trend line or above .8941 and look for a drop to the bottom of the channel (quite a ride) or buy a breakout of the channel line.

Most likely, if I trade this pair at all this week, I'll trade off the daily chart. That chart has what looks like a sharp correction forming (could be a bull flag) and price is currently dropping within the corrective channel. One could go long at 8575/60 with a stop below prior resistance of .8531. There's a cluster of support up from .8531 which includes fib levels, daily SMAs and weekly and monthly EMAs. A break of that would target the 84's and possibly signal a move down to the bottom of the corrective channel on the monthly chart. So one would reverse.

Here's the monthly 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.