EURGBP—short

My long position from .8760 profit stopped out at .9015 for a profit of +255 pips. I went short at .9028 this morning and have moved my stop to breakeven.

Support is at .8967, .8920, and .8867.

Here's the three-hour 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.

GBPJPY—nice moves

I picked up another long at 134.44 to go with my long from 133.80. I've just taken partial profits on the one from 133.80 for +201 pips. I wouldn't chase it if I wasn't already long but I'll probably continue to buy on dips. Next resistance is 136.45, 136.77, and 137.74.

Here's the three-hour chart:























Copyright 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.

USDCAD—slipping

My short position in USDCAD is from 1.0310 and is stopped at breakeven. The outlook for this pair is negative as it is now pushing at the little two-day base it hammered out at 1.0271. Support is at 1.0242, 1.0225, and 1.0208. Those are obvious fighting points for the bulls but it's possible the pair may drop to the lower boundary of its downward channel at 1.0078. I doubt very much we'll see a move back to parity. Resistance is 1.0340/62 and 1.0444. Until it successfully scales those prices, there's really little point in talking about higher levels.

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.

Frame Dependence

How we behave when trading is dramatically affected by how we frame things. "Frame dependence" is the term that addresses this. The framing we apply causes our behavior in any given situation. There are cognitive and emotional aspects involved. The cognitive aspects have to do with how people organize information and the emotional aspects have to do with how they feel about that information.

An example, offered by Hersh Shefrin in his book, Beyond Greed and Fear, has to do with someone buying a stock which immediately goes down. As soon as it comes back to the purchase price they sell it because they're defining the frame relative to the purchase price instead of mark to market. You could say, "Well, yeah, I don't want to lose money," but the issue is more subtle than that. If the last time you watched a trade move into negative pips, return to break even and you stayed in, only to incur a loss in the end, you're going to be more inclined to get out the next time it happens. Your recent experience is having an impact on this new decision.

Each decision to act on a trade has to be taken anew, unaffected by the last time. This is much easier to do if you have an overall philosophy of trading or a consistent approach that you follow. It's the reason I can go long in a pair, as I did in the Euro and GBPJPY yesterday, even though I believe they're overall weak. Trade the market where it is, unbiased by behavioral biases.
© 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.

GBPJPY—finally climbing

This pair seems to have found some energy to fuel the lethargic rally it has been trying to get underway this week. When last I wrote about the pair on Tuesday, I said I had two short positions that the rally would probably take out. It took out the one from 133.86 at 133.46 for +40 pips and the one from 136.03 at 134.46 for +157 pips. I stayed out of the pair until yesterday when I took a long position at 133.80. The question is how high could it correct?

If it doesn't get beaten down by the NFP news then resistance is at 134.84/96, 135.52, and 136.77. The last one is close to the .382 retracement (136.45) of the move down from the Feb. 17 high of 143.65 so it should be able to make it up there, again depending on emotional reactions to NFP news. Once it does so, I'd look for another short. Support is at 134.09, 133.78, 133.28, and 132.65. This pair still hasn't achieved the price targets I had for it down to 130.

Here's the three-hour 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.

February Trade Results--up 5,915 pips

February Trade Results—up 5,915 pips

Since I began posting the results of the trades I blog about and show when I take them, the results have been:

Feb 2010—up 5,915 pips
Jan 2010—up 3,116 pips
Dec 2009—up 2,092 pips
Nov 2009—up 2,054pips
Oct 2009—up 1,994 pips

There have been many opportunities in recent months and the market has been geared to my particular trading style. February offered the chance to make huge gains at the beginning of the month. Almost 50% of my gains were made in the first week alone! Had the large market moves of the first week not occurred it's likely my gains for the month would have been similar to January's 3,116 pips.

As I always write, the real secrets to good trading are hard work and discipline. My success isn't the result of some secret Gann technique or from using some mystical cycle or astro-economic phenomenon. It's not that there may not be value to cycles, astro-economics, or Gann. It's that too often the so-called practitioners speak in code and then offer to sell you something, sometimes for lots of money, to learn their secrets. Look, I'd pay lots of money if there was any proof. But because they shroud everything in mystery, no objective evaluation can be done. To be successful in trading you only need good technical analysis skills (which can be learned), a strong work ethic, and good discipline. If you look at the detail of my results below you'll see small losses and big gains. It really is about letting profits run and cutting short losses. That is the only "secret." That's how I earned those big gains during the first week of February.

In some of the trades, I take partial profits. I'm still not sure how to best report these so I just report them as I take them. If I take partial profits at 50 pips and close out the trade at 100 pips, I count it as a total of 150 pips.

Here are the details of the February trades. Each was blogged about as I was ready to take it or shortly after I got into it. You could see them on the charts I posted because they show up as triangles or inverted triangles depending on whether I'm long or short. I list the detail in the order in which they occurred during the month. That is, when I'm compiling my results I start at the first day of the month and just add each day. For example, in AUDUSD, you see detail of where the first trade was +9 pips. That means that's the first AUDUSD trade I reported during the month. So you can go back in the blog and examine each one in more detail.

Here is the currency pair, total net gain or loss in pips, and the detailed trades:

AUDUSD +241pips total; +9, +87, +5, +28, +57, +55
EURGBP +269 pips total; +123, +146
EURUSD + 1,539 pips total; +205, +373, +300, +100, -47, +280, +23, +10, +7, +91, +150, +25, -43, +13, +12, +40
GBPCHF + 49 pips total; +46, +3
GBPJPY + 964 pips total; +335, +463, +69, +97
GBPUSD + 2,119 pips total; +112, +232, +137, +460, +544, +287, +247, +100
USDCAD +637 pips total; +446, - 68, -31, +270, -23, -50, -32, +125
USDJPY + 97 pips total; +67, +10, +20

February was a hopping month. Let's hope March offers as many opportunities.

Nonfarm Payroll

Since the market is a bit moribund this morning, I thought I'd post something I wrote to a trader's group I belong to after the last NFP report. I've found that most people don't understand this report and certainly don't read the thing. It's 42 pages long, after all, and most people have a life. I must not have a life because I do read it. The reason I do is that it's in the details that one can start to ferret out what the true picture is. This is part of what I posted to the trader's group on last month's numbers:

Changes in the establishment data (Summary Table B) are where a wealth of information is found. The reason this is so interesting is that this data is not self-reported but is calculated from payroll records so it gives a clue as to whether new jobs are being created or lost. You can't just look at the total number though because it includes government employee numbers and these don't say much about the economic growth. For January, total nonfarm is -20,000; if you net out the -8 for the government it's still almost flat. Differences in hours worked, which is much more relevant, is also almost flat (Jan '09 was 34.2 and the numbers for Nov, Dec, and Jan '10 are 33.9, 33.8 and 33.9 respectively. Ideally, one wants to see a number over 41 so the economy is still struggling but it's not tohu-bohu. Looking at the manufacturing component of that (which is a good indication of economic activity), the numbers are also flat which is encouraging (39, 39.6, 39.6, and 39.9 for Jan '09, Nov, Dec, and Jan '10 respectively). It would be nice if they were a bit higher but again not a catastrophe.

The numbers that are troubling are the number of long-term unemployed Table A-12). Those unemployed 27 or more weeks were (in thousands) 2,742 in Jan '09. In Dec '09 they were 5,896 and in Jan '10 the number is 6,423. However, if the number of unemployed 5 weeks or less goes up it's almost worse because this means there is a spike up in layoffs. This unadjusted number was 3,464 (all #s are in thousands) in Jan '10 up from 2,871 in Dec. However it's down from 4,137 in Jan '09 and that's quite a decrease. The seasonally adjusted number is more relevant and that shows up 3008 in January from 2929 in Dec which is not much of a jump at all and it's down from the 3,633 in Jan '09. I compare the up/down for the months to the report the same time for the last three years but, as I'm always reading in this forum, I don't want to spoon feed anyone so I won't bother revealing that.

Another area of interest is watching the changes by industry. All of these net to the total number that's bandied about. This is table B1 and anyone truly interested in getting a look on which sectors are leading and which are lagging should peruse it each month. I'm not going to go through it but there are no shockers here and it's pretty much what you'd expect. With other data in the report you can also glean percentages as to what industries are adding payroll.

The issue of the under-reported is where people come up with numbers that are sometimes double what the government reports. These are the people too discouraged to look and those that really want full time work but have been forced into accepting part time jobs. The government numbers do try to recalculate based on this and it's found in table A15. Here the number for Jan '10 is a walloping 16.5 seasonally adjusted which it really has to be. Before the doom and gloom crowd starts storing up supplies and hoarding guns and gold, though, it's important to note that this number has been decreasing, albeit slowly (numbers for Sept to Dec are 17.0, 17.4, 17.2, and 17.3). It's up from the 14.5 of Jan '09. However, again, employment numbers lag so that needs to be taken into consideration.

© 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.

EURGBP—still in this trade

Yes, believe it or not, I still have a partial position on from Feb. 23 at .8760. If it drops to .9016 it will hit my profit stop and I'll be out. Yesterday, it hit a low of .9017 so it missed my stop by one pip. Amazing how often that has happened the last couple of weeks. With it currently up around 278 pips there's nothing to do but wait to see if it resumes climbing or if it's going to drop.

Like many pairs, EURGBP is hovering, waiting for some clear direction. If it thinks it's going to get it from NFP later this morning, it's nuts but what do you do?

If the pair does break below .9000, .8969 and .8832 are both possible. Resistance is at .9100 and .9150. Support is at .9000, .8969, .8832, and .8760.

Here's the three-hour 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.

EURUSD—hovering

Yesterday, we actually did get some movement in the Euro. I ended up closing my long position from 1.3663 at 1.3598 for -65 pips. I took another long position at 1.3557 which now is stopped just above breakeven. On the hourly chart, you can see the Euro near the top of a small flag so 1.3609 is going to be resistance. If I wasn't long, I'd short here but the range of the flag is small and the pips aren't really worth closing my long position. Meanwhile, NFP comes out today so the pair may continue to hover.

Why take long positions if I believe the Euro is still weak? The main reason is that currencies don't go straight up or down and I believe we're in a correction. We've already concluded an Elliott Wave flat correction on the hourly chart and may be beginning the remainder (which would end up being a double). If this is a correct interpretation then there should be more upside, possibly returning to 1.3750 and perhaps to 1.3850 and 1.4039. I could, of course, wait until the pair gets to that point and try shorting. Both that and what I'm doing are valid approaches. The key message here is that you need to have an approach, one that you can justify to yourself. You also need risk management.

If, in fact, this is the end of the correction and it's getting ready to drop again, then I have my targets and I'll be ready to go short.

On a daily basis the pair closed below the 13 EMA yesterday.

Resistance is at 1.3610, 1.3685/97, 1.3736, 1.3839, and beyond to 1.4022 and 1.41. Support is at 1.3552, 1.3500, and 1.3435. Below that is tohu-bohu.

Here's the three-hour 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.

Slow Market

It looks as though this is going to be a slow day in the Forex market. My suspicion is that this will last until after NFP, Friday. Today might be a good day to take off.

EURUSD—unclear

My long yesterday at 1.3626, profit stopped out overnight at 1.3678 for +52 pips. I've tried another small long at 1.3663 but there are mixed signals at the moment. They'll clear up eventually. Meanwhile, my stop is tight and I'm moving it to breakeven as soon as possible.

The headwinds are stiff. Yesterday, it reached 1.3736 before falling back in apparent dismay to find itself up there. By doing this it managed to peek above the 21 EMA on the daily chart and it actually closed above the 13 EMA. Bravo. Now, even though it's still above the 13 EMA, it's finding it tough going to get through the resistance in the 1.3685/97 area. If it fails here, then, back to the 1.34's it may go.

Resistance is at 1.3685/97, 1.3788, 1.3839, 1.4026 and 1.4116. Support is at 1.3623/34, 1.3583, 1.3512, and 1.3435.

Here's the 15-minute chart since it best shows the small channel within which poor Euro is struggling:




















© 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.

USDCAD—breaking down

My long position from yesterday stopped out at break even. The pair has been sluggish at best and it keeps poking at its lows. Since it broke below 1.0300 this morning, it obviously wants to drop down a bit, perhaps to 1.0234 before it tries another run up. The pair has basically been in a slightly downward sloping range since October (high in Nov. 1.0853; in Feb. 1.0781).

Support is currently at 1.0267, 1.0234, and 1.0208. Resistance is at 1.0362, 1.0443, and 1.0556. The high today, so far, has been 1.0330. One could wait to see if it rallies a bit before shorting or short now that it has broken 1.03. I shorted at 1.0299.

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.

February Trade Results—up 5,915 pips

Since I began posting the results of the trades I blog about and show when I take them, the results have been:

Feb 2010—up 5,915 pips
Jan 2010—up 3,116 pips
Dec 2009—up 2,092 pips
Nov 2009—up 2,054pips
Oct 2009—up 1,994 pips

There have been many opportunities in recent months and the market has been geared to my particular trading style. February offered the chance to make huge gains at the beginning of the month. Almost 50% of my gains were made in the first week alone! Had the large market moves of the first week not occurred it's likely my gains for the month would have been similar to January's 3,116 pips.

As I always write, the real secrets to good trading are hard work and discipline. My success isn't the result of some secret Gann technique or from using some mystical cycle or astro-economic phenomenon. It's not that there may not be value to cycles, astro-economics, or Gann. It's that too often the so-called practitioners speak in code and then offer to sell you something, sometimes for lots of money, to learn their secrets. Look, I'd pay lots of money if there was any proof. But because they shroud everything in mystery, no objective evaluation can be done. To be successful in trading you only need good technical analysis skills (which can be learned), a strong work ethic, and good discipline. If you look at the detail of my results below you'll see small losses and big gains. It really is about letting profits run and cutting short losses. That is the only "secret." That's how I earned those big gains during the first week of February.

In some of the trades, I take partial profits. I'm still not sure how to best report these so I just report them as I take them. If I take partial profits at 50 pips and close out the trade at 100 pips, I count it as a total of 150 pips.

Here are the details of the February trades. Each was blogged about as I was ready to take it or shortly after I got into it. You could see them on the charts I posted because they show up as triangles or inverted triangles depending on whether I'm long or short. I list the detail in the order in which they occurred during the month. That is, when I'm compiling my results I start at the first day of the month and just add each day. For example, in AUDUSD, you see detail of where the first trade was +9 pips. That means that's the first AUDUSD trade I reported during the month. So you can go back in the blog and examine each one in more detail.

Here is the currency pair, total net gain or loss in pips, and the detailed trades:

AUDUSD +241pips total;
+9, +87, +5, +28, +57, +55
EURGBP +269 pips total;
+123, +146
EURUSD + 1,539 pips total;
+205, +373, +300, +100, -47, +280, +23, +10, +7, +91, +150, +25, -43, +13, +12, +40
GBPCHF + 49 pips total;
+46, +3
GBPJPY + 964 pips total;
+335, +463, +69, +97
GBPUSD + 2,119 pips total;
+112, +232, +137, +460, +544, +287, +247, +100
USDCAD +637 pips total;
+446, - 68, -31, +270, -23, -50, -32, +125
USDJPY + 97 pips total; +67, +10, +20

February was a hopping month. Let's hope March offers as many opportunities.

EURUSD—update

I entered a small long position at 1.3626 because it stalled in an area of prior short-term support and I now have a little uptrend line on the hourly chart. This is very short-term analysis so stops have to be very tight. I plan to move the stop to breakeven as quickly as possible. However, the pair must break through the resistance I mentioned in my prior post at the top of the broadening formation.

Here's the one-hour chart now:





















© 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.

EURUSD—what's next?

Did I not write early yesterday morning that buying the bounce was the right thing to do? That's why I went long at 1.3496 and booked +60 pips. Now the question, as always, is "what's next?"

Overall, the pair is still weak and there may be further declines. For now, though the picture isn't that clear. Support seems to be holding in the 1.3435/50 area. On the daily chart there is bullish divergence. On the other hand, there is a broadening formation on the hourly chart. These tend to deadly after a climb. In addition, it's at stiff resistance from an overhead long-term speed line and from the prior high. Finally, I don't like the way it's nibbling at its very short-term uptrend line.

For now, as of 7:41AM EST, I want to see if it can rally if it drops to the bottom of the broadening pattern. I may buy there (currently at 1.3586). A break above the pattern might be a buy as well but with very tight stops. If it drops out of the pattern, a short might be in the cards but with very tight stops.

Resistance is at 1.3681/92, 1.3726, 1.3788, 1.3839, and 1.4026. Support is at 1.3593/85, 1.3434/51, 1.3405*, 1.3300 and 1.3247.

Here's the hourly 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.

EURGBP—possible correction?

Yesterday was what was known as an inside day. This means that the trading range was smaller than that of the prior day. The day before yesterday (Monday) the low was .8969 and the high was .9150. Yesterday, the low was .9018 and the high was .9102. This means the pair moved 181 pips on Monday and only 84 on Tuesday, so it hints that momentum is dropping. You need momentum to keep prices moving up. Therefore, the pair may be in for a correction, even though I originally calculated a profit target for this pair of .9180. There's negative divergence on the three-hour chart.

The high today, as of 7:14 AM EST, is .9100. I've moved my stop to .9015 for the long position I entered last week at .8760.

Resistance is at .9100, .9150, .9240, and .9412. Support is at .9018, .9000, .8969, .8890/85 and .8708.

Here's the three-hour 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.

USDCAD—the plusses and minuses

Yesterday's short from 1.0519 stopped out at 1.0453 for -66 points. I have tentatively stuck my toe back into the water with a long position from 1.0340. Why?

One reason is that it stalled at that level. (It actually stalled somewhat below that, hitting a low of 1.0310). Since support was at 1.0350 or so, this was a positive sign. Another reason is the bullish divergence on the three-hour chart. There's bullish divergence on the daily chart as well. On the hourly chart, the pair was greatly oversold and I'd expect to see a little relief from that situation, if from nothing else except bottom fishers. The long upper and lower shadows on the hourly candle at that level reflect indecision. Finally, looking at GBPUSD, which often moves opposite USDCAD, one sees a great deal of weakness. So, it's worth a small position and the market will prove it out or not.

On the other hand, let's be realistic. The last three days have been bearish with bold, sinking candles. The pair broke a short-term uptrend line drawn between the January and February lows. That stank. The behavior since the January low doesn't exactly inspire confidence, does it? If the pair was beginning a third Elliott Wave then somebody needs to tell it that price movement is supposed to be robust, bold, and upward.

After making thousands of pips in this pair since October, I had five small losses in February. My trades overall in the pair were still profitable (+637 pips for the month) but this says to me that perhaps the pair is still basing. Supporting my hypothesis that it is basing are the time/price calculations I've calculated for the pair. If these are correct, then we should be getting to the end of a consolidation period. We will see movement, either up or down. If it's going to be down then it will break through the October lows. If up, it should begin to be more energetic—get a little pizzazz as it were and start moving. The superficial work I've done with cycles also suggests we're near a cycle low or coming upon one soon.

So we'll have to see. Here's the three-hour 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.

EURGBP—hangin' in for now

After this pair's outstanding rise yesterday, it is taking a bit of a breather although it hasn't dropped back very much. I'm still long from .8760 and profit stopped at .8960 so regardless of what happens, I'm in good shape.

Yesterday's high was .9150 and this proved stiff resistance. The high so far today has been .9093. If it approaches it again, I'd bet there will be short selling which may drive it back. Should it make it through, however, .9150 will still be difficult to overcome. All I'm doing at this point is moving my stop. If it breaks below .9000, price behavior will determine whether it's a buy on a dip or a short on a break.

Resistance is at .9100, .9150, .9240, and .9412. Support is at .9000, .8968, and .8890.

Here's the three-hour 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.

Still time to Protest against the proposed CFTC rule to limit leverage

I wrote about this in January but since there is still time to protest the proposed rule that retail Forex traders should be limited to only 10:1 leverage in their accounts, I wanted to repeat it.

This rule would have the effect of driving small traders to offshore, completely unregulated accounts. Their proposal can be found here:

http://www.cftc.gov/newsroom/generalpressreleases/2010/pr5772-10.html

If you disagree with this,you may submit your comments to

secretary@cftc.gov.

Include “Regulation of Retail Forex” in the subject line of the message and the identification number RIN 3038-AC61 in the body of the message.

Also, with the identification number RIN 3038-AC61, you can submit your comments by any of the
following methods:
• Fax: (202) 418-5521.
• Mail: Send to David Stawick, Secretary, Commodity Futures Trading Commission, 1155
21st Street, N.W., Washington, DC 20581.
• Courier: Same as Mail above.

All comments received will be posted without change to http://www.cftc.gov, including any personal information provided.

Below is the email I sent:

I am writing to object to the proposed regulation of retail Forex traders (RIN 3038-AC61). Specifically, I object to the provision that states, "Leverage in retail forex customer accounts would be subject to a 10-to-1 limitation."

While I understand you see increasing leverage requirements as increasing consumer protection, the result will be the opposite of what you intend because this provision would drive small retail traders to offshore brokers who are not subject to any regulation. As a result, they may be in danger of losing all their money, regardless of any specific trading decisions they make, because of unethical brokers.

In addition, the retail Forex market is comprised of many different levels of individuals. Your proposed rule does not allow for this. For example, I have passed the three exam series from the Market Technician Association and have been awarded my Chartered Market Technician (CMT) letters. I also have five years of trading experience as an independent trader. I should not be subject to a 10-to-1 limitation and have no idea why you think this would be protective of me. It will prevent me from moving profits out of my trading account on a regular basis because I would need additional capital to maintain margin requirements. The result would be that I would have more money, not less, at risk at any given time.

Finally, it is tempting to say that the small retail trader is most at risk in trading because they're uninformed. This, however, is a questionable statement based on various studies. Research has found that mutual fund managers, newsletter writers, Wall Street strategists, and investment advisors make the same behavioral errors in the financial marketplace as the "uninformed public" does. One only has to look at the behavior that led to the financial crisis of 2008 to know this is true as regards risk. While the response might be that these people can afford it, I remind you that it was the public's money used to bail out the financial institutions.

Rather than a blanket requirement of 10-to-1 leverage, it would be more appropriate to require some sort of training for those who intend to trade, even if this was only confined to risk management issues as opposed to a more general how to trade approach. Traders who could not show sufficient training or experience could be required to pass an online exam that would show they understand risk and money management. The individuals could be assessed a fee for this so that the cost would be borne by those who wished to trade. Brokers could not open an account unless the individual could show proof of passing this exam. This would do more to limit risk than to have a blanket provision such as 10-to-1 margin requirements. This is no different from requiring a driver's license for someone who wishes to drive.

Dianne Fecteau

GBPJPY—waiting for a rally

This pair is taking a pounding and even after yesterday's slide, doesn't seem to be able to overcome the negative sentiment. I'm still partially short from 136.03 and entered another short yesterday at 133.86. The pair is rallying slightly so that latter one may be taken out soon since the profit stop is at 133.46. I'd welcome a bit of a rally as it would provide a nice short entry. There's some bullish divergence on the three-hour chart.

Resistance is at 133.43, 134.04, 134.65, and 135.52. Support is at 132.57, 132.03, 131.47 and 129.63.

Since I have a profit objective for this pair down into the 130.00 area, I believe there will be more weakness. So it's the same old, same old. Sell rallies.

Here's the three-hour chart (I have arrows pointing to my trades):























© 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.

My trades

Someone emailed me to ask if I take the trades I write about. That's the whole point of my blog. I was tired of hearing about "traders" who didn't take real trades or didn't take them in real money accounts. You can see my trades on the charts I post. They're represented by little triangles (inverted if I'm short). I mention this but not every time as it gets tedious. I also report my results once a month (I'll post February later today) and readers can go back and review the trades. In any case, for the chart I just posted on the Euro in the last blog, my trade is the little blue triangle. I'll try to be more cognizant and point it out on charts but it's always there unless I post a weekly or monthly chart (different charting package) or specify that I'm considering a trade. I've pointed to it with an arrow below:

EURUSD—bounce

The Euro dropped to 1.3435 early this morning. No doubt this was a heart-stopping level for many Euro bulls. The bears must have been delighted, at least until the pair bounced.

The remainder of my short from yesterday (at 1.3623) profit stopped out at 1.3567 for +56 pips. I went long this morning at 1.3496. Why, if I'm bearish on the pair, did I do so? The first reason is that prices don't drop straight down as I've written many times. In addition, a look at the weekly chart shows that the lows the last two weeks have been 1.3444 and 1.3451. This morning's low of 1.3435 looked as though it was holding so clearly there is support in this area. One could reasonably expect a bounce. On the hourly chart, one could see a beautiful, classic hammer candle. This, combined with being at support, often results in a reversal. Finally, there's bullish divergence on the one-hour chart.

It's currently up 62 pips (7:34 AM EST) and is profit-stopped. I may take some partial profits soon, especially as it nears 1.3586. I'll obviously be watching it closely. Resistance is at 1.3580, 1.3600, 1.3654, 1.3692, 1.3726, and 1.3788. Any of those look to me like good shorting levels. Support is 1.3434/51, 1.3405*, 1.3300 and 1.3247.

Here's the hourly 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.

GBPJPY—sell rallies

I mentioned Friday that I was short GBPJPY. I entered at 1.3603 and as of now, 8AM, EST, the pair is over 300 pips in profit. I took partial profits at +300 pips.

When I started shorting this pair early in February, I noted that the confirmed double top from June and August of last year had a projected price target of 1.3045. It's not that far away. There may, though, be some rallying from this point as the pair fell pretty hard this morning to a low of 1.3203 before bouncing up to its current 133.12. There's positive divergence on the hourly chart:

Support is at 1.3203, 1.3147, and 1.2963. Resistance is at 1.3382/90 1.3414, and 1.3551. It's worth shorting on rallies and I have a sell order in place.

Here's the hourly 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.

EURUSD—weak

You wouldn't know it by looking at EURGBP but Euro looks weak. What's very interesting, though, is to take a look at the daily chart. I drew the flag pole down to the first daily flag in orange. Then, I duplicated that exact length and ran it from the bottom of the flag pole down. Euro seems to be marching steadily towards that target which is coming in at 1.3382. However, there's bullish divergence on the daily chart so there may be some backfilling coming up.

I had two shorts from Thursday and Friday that both stopped out at +5 pips. I shorted again this morning at 1.3623. The low so far today has been 1.3510. I took partial profits at +101 pips.

Support is at 1.3510, 1.3452/44, 1.3300, 1.3247. Resistance is at 1.3654, 1.3692, and 1.3788. If it reaches that level, I'll be going heavily short.

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.

GBPUSD—did you see that?

I took a short position this morning in this pair at 1.4938, not expecting much because it was already down. Wham! I almost immediately hit the profit target at 1.4868 for +70 pips. The pair dropped from 1.4972 to 1.4785 in three minutes! That's 187 pips and is as clear a lesson as is needed to anyone who doesn't set stops. The pair dropped from 1.5184 to the low in three hours. Pretty good hourly pay if you were short from that point. It then regained 126 pips in less than a half-hour. If this is the way price action is going to be today one should either 1) get out the deposit slips if you're on the right side of the market, or 2) take the day off. I've shorted at 1.4878 but with a very tight stop.

Resistance is at 1.4911 (it's fallen off a bit from there), 1.4977, 1.5000, and 1.5184. Support is at 1.4785 which is the low today as well as just above the long-term, daily uptrend line. Further support lies at 1.4700, 1.4600, and 1.4517.

Here's the one-hour 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.

EURGBP—taken off

This pair has taken off. My position from .8760 is up 330 pips as of 6:19AM EST. I just took some partial profits at +323 pips. I closed the second position on Friday +50 pips. (That was dumb in retrospect but I bought this pair three times last week thinking I'd make a hundred pips or so. I'd already made 123 pips on one position and I certainly didn't expect this rise. At least I didn't close both.)

EURGBP's rise seems largely related to the awful shape the pound is in this morning, rather than because of Euro strength. It reached a high of .9095 early this morning. Between here and .9110 is formidable resistance. Should it manage to overcome it (not likely in my opinion), the next resistance is at .9055 and .9154. At this point, I'll just keep moving my stop.

Support is at .9071, .9000, .8967, and .8867.





















© 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.

USDCAD—at support

The pair dropped to 1.0494 overnight, taking out both my long positions. The long from 1.0444 profit stopped out at +60 pips; the one from 1.0534 profit stopped out at +10 pips.

I went long again this morning at 1.0519. It's not completely clear that this pair is going to scale any walls and if it decisively drops much below 1.0494, it would hint at larger drops. I like this price, though, because it may be finding support on a downtrend line coming in from September (sometimes drawing trend lines out into space can give you an idea where price might find support or resistance). I wouldn't look at this alone, of course, but there's also a confluence zone near here and it's polarity. On the one-hour chart there is bullish divergence. Stops can also be tight.

The first hurdle is getting back above 1.0556. If it achieves this, then additional resistance is at 1.0600/14, 1.0681, and 1.0708, 1.0766/81, and 1.0848. Support is at 1.0439/44, 1.0413, 1.0350/70, 1.0250, and 1.0225.

Here's the one-hour 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.