Note the rise from the classic morning star formation. Note, too, that three of the last four candles are very bullish and that even with the upper shadow on the October one, the bulls are coming into the month in control of the situation. To me, unless bears take control soon, this strengthens the argument that prices may rise to the downtrend line and that this November might be another up month in line with the scant, ten-year seasonal data.
When I look at other evidence, such as my daily point and figure charts (not shown), I have an internal downtrend (45°) line coming in at 1.4180 (not too great) but I also have price targets well above that line.
On the other hand, sentiment is very bullish and markets have a way of going against that. On a daily basis it can be reasonably argued that we're at the top of an Elliott Wave correction (see prior posts) although wave c at 1.618 times that of wave A also pushes us into the mid 1.40s. Then there is that pesky harmonic pattern (the bat) that I blogged about at the beginning of October that would a high well above where we are now.
OK, I have some mixed evidence but the weight of it is leaning bullish. Therefore my choice as a trader is to buy pullbacks in the shorter time frame. I'll discuss that in the next post. Price behavior, once it gets to 1.4450 to 1.4579 (the January high) is going to be key. Maybe it will get there this month.
Here's the monthly chart:
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© 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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