Friday, July 9, 2010

Summer Fridays

I'm not trading or blogging on Fridays during the summer. You usually see less liquidity. This can lead to strange moves so if you do trade, be careful. See you Monday.

Thursday, July 8, 2010

GBPUSD—trying to rally

My position from 1.4918 profit stopped at +194 pips. I bought again at 1.5131 and have moved the stop to breakeven.

Today saw quite a steep pullback for cable from a high of 1.5241 this morning down to a low of 1.5103. It's not quite as low as yesterday's 1.5081 that barely confirmed the double top of 1.5230/27 but it causes one to question just how strong this uptrend is. Below 1.5081 would most likely be interpreted as the end of it. The logical price target would be 1.4932. The pair is still barely above the 20 EMA on the weekly chart that capped the pair the weeks of 4/16, 4/30 and 6/25. What a cliff hanger!

Resistance is at 1.5241, 1.5374, 1.5523 and 1.5816. Support is at 1.5081, 1.5037, 1.4932, 1.4874, 1.4710, 1.4696, 1.4590 and 1.4550.

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—a tantalizing level

EURGBP has now laboriously climbed to a high of .8380. It's a tantalizing level to go short—it's good resistance, one could have a tight stop, etc. The pair is hesitating, no doubt because sellers are piling in. I'm considering shorting but will base a decision on how momentum acts over the next hour or so. If EURGBP does clear .8400/20 then there's not much stopping it until .8500 or so where it bumps into a downward trend line on the weekly chart.

It's difficult to believe that such a robust downtrend can end so easily. In fact, a look at the daily chart shows it's not likely—the ascent of the uptrend since the low is too steep to be maintained. This is more than likely corrective and the pair will probably reverse soon. But I'm not trading it until I see more evidence that this has happened.

Resistance is at.8382/.8420, .8519 and .8594.
Support is at .8320/10, .8265, .8218, .8180, .8107/00, .8068, .8000 and .7900.

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.

EURUSD—bulls have their fingers crossed

I have one long position open from 1.2413.

The pair has climbed nicely but is struggling at 1.2688 (it touched it last evening and again this morning). There are some headwinds here but there's no real reason (yet) to think it won't get through it with a little back and fill. If so, a C wave corresponding in length to wave A would take the pair to 1.2743. Besides the collective wish of the Euro bulls, is there any other evidence for a target near here? Yes, a weekly trend line is coming at around 1.2755. In addition, 50% of the move down from 1.3692 to 1.1892 is 1.2792.

There's also an ending diagonal in the larger upward correction on the three-hour chart which implies caution from an Elliott Wave perspective. Or you could see it as a wedge (both trend lines heading in the same direction). Wedges can be consolidation patterns within the trend which means higher prices but they can also be topping patterns. As usual, one pattern does not a conclusion make.

However, if Euro gets into the 1.27 area (as it's is now), begins faltering and RSI should move and then fall from over seventy on the hourly chart one can think about shorting. RSI still has a ways to go on the hourly chart to climb above 70 so it may continue up. Should Euro easily clear the 1.27 range, then I'll be adding to longs.

Resistance is at 1.2688, 1.2743/55, and 1.2800. Support is at 1.2558, 1.2480, 1.2435, 1.2409, and 1.2350.

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.

AUDUSD—good rally

Tuesday, after I was stopped out of my short, I wrote that I was studying the pair as to whether to go long. Yesterday I finally did so at .8593. The pair is up 157 pips as I write at 5:55AM EST.

This was a tough trade for me as I am biased short on this pair (as well as some other pairs that have been rising lately such as EURGBP, EURCHF, etc). I was also seeing some negative divergence on some time frames and I love, absolutely love, divergence as a piece of evidence. But bias and what was only one piece of evidence had to give way to the charts. It did. Not that it's easy.

This, to me, is the key challenge of trading. Anyone can read a chart. However once you've read it and formed an opinion that you're willing to place a trade on, the opinion itself can get in the way by becoming a mind set. You can get caught up in taking trades that conform to that mind set and find yourself getting stopped out over and over. This is the market's not so kind way of saying, "You're wrong." Most of us hate being wrong. But to survive and make money trading you want to embrace it. "I'm wrong and thank you so much for telling me that—I've learned something." This attitude would probably improve our lives immeasurably if we would consistently practice it but regardless of that overreaching thought, we must practice it when trading.

OK, enough of the mind stuff. I went long because it was clear, on the chart, that the pair wanted to go up. It had confirmed the double bottom (.8616/17) when it exceeded .8510. Yesterday, after a low of .8450, it began to move up with some strong candles. More important was that momentum (as represented by RSI) was strong. I had good price targets on my P&F charts that didn't look as though they were being compromised in any way. The mealy-mouth RBA statement earlier this week had been well-received. Risk sentiment seemed to be improving overall. So I bought at .8593.

I am not abandoning my opinion that this may be a corrective C wave. But let's look at that opinion at the time I placed my trade. If it was to be .618 of A's length then .8597 was the target. So why didn't I short with a tight stop? Because the pair wasn't faltering. In fact you could, if you put your ear to the chart, almost hear the engines roaring. Other pair's had roared past their .618 of A moves so why not this pair? I'd blogged yesterday morning that .8640 was possible resistance. C equal to A would be .8688. What if C became 1.618 of A? The decision rested on whether I could set a tight stop. The prior hourly candle had a low of .8560 with a drop just below the 70 RSI on the hourly chart. Bam, I was in, as they say. I did draw a breath of relief when I moved the stop to breakeven on the close of the trading candle. My short bias hasn't fled.
OK, now what? The pair is currently hovering just below this morning's high of .8761 which is polarity and just above the 50% retracement of .9364 to .8067. It bears watching and I may take some profits off the table. The next target range is .8835 to .8860. (.8835 is 1.618 of the A wave; .8868 is .618 of the .9364 to .8067 move; .8859 is a June 21 high and polarity).

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.

Wednesday, July 7, 2010

EURUSD—update

I closed one of my positions for +202 pips.

© 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—update

I closed out my second position at +98 pips, mostly because 1.5230 is coming up and the pair began struggling at 1.5215. This would be a third touch if it could get there and it seems sellers are coming in. I still have one position long from 1.4918. If the pair moves past 1.5230, I may take another position.

© 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—struggling and stair stepping

I'm still in my two long positions from 1.2400 and 1.2413.

After reaching 1.2662 yesterday Euro stumbled down to 1.2558 this morning. This is a Fib confluence zone of 1.2589 and just under a daily speed line. It was struggling here yesterday; it's struggling here today. Should it resolve this then it may be able to climb above yesterday's high and possibly even reach 1.2743 (the length of the A wave of an ABC correction). On the three-hour chart below you can see the stair-stepping up in price.

Resistance is at 1.2662, 1.2743, and 1.2800. Support is at 1.2480, 1.2435, 1.2409, and 1.2350. This shows layers of support so if it breaks below those then expect lower.

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.

GBPUSD—struggling

I'm still long from 1.4918 on which I've taken partial profits at +203 pips. Early this morning I added another long at 1.5094 and have moved the stop to breakeven. The pair has been struggling since yesterday morning, retracing all of yesterday's move up. The double top of 1.5230/27 was actually confirmed earlier this morning at 1.5081. However it hasn't yet followed through to the downside. It's possible the low was the bottom of an ABC correction.

The key weekly 20EMA is at 1.5075 this morning so the pair is managing to hover just above it. If that breaks, I'd be suspicious of any further upward movement and would more than likely close my longs and possibly reverse. The reason that EMA is so significant is that it capped the pair the weeks of 4/16, 4/30 and 6/25. In addition, before last week, price had not been above it since early February and hadn't closed above it since mid-January.

Resistance is at 1.5374, 1.5523 and 1.5816. Support is at 1.5079, 1.4874, 1.4710, 1.4696, 1.4590 and 1.4550.

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.

AUDUSD—good rally

AUDUSD confirmed the double bottom of .8316/17 (two touches since 30 June) when it cleared.8510 yesterday. It faltered just below the June 30 high of .8566 and dropped to .8450 which was a bit surprising (it would have been more positive if .8510 had held) but yesterday's strong performance has the bulls out.

This may be a corrective move in which case waiting until the pair reaches .8640 would provide a good short entry. Beyond that, one would want to be long if possible. However the immediate challenge is to see if the pair can regain .8510. Gee, that was the first resistance when I posted yesterday about this pair. Plus ça change, plus c'est la même chose.

Resistance is at .8510, .8565, .8645, .8737, .8861, and .8895. Support is at .8432, .8316, .8133, and .8067.

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—another narrow range

EURGBP climbed to a high of .8342 yesterday and has been ranging just below there since. My short yesterday stopped at breakeven obviously.

It has been in a vicious downtrend so this is most likely a corrective pattern rather than a trend reversal. Regular readers know I have no problem trading corrections but I'm not clear on this one so it's best to not trade it—more than one successful trader has said if you don't know what's going on, stay out. It's nibbling at its upward trend line at the moment and RSI has dipped a bit below its upward line. .8380 will be critical and if it starts to falter there then sellers will most likely pile back in.

Resistance is at .8342, .8382/.8400, .8519 and .8594. Support is at .8265, .8218, .8180, .8107/00, .8068, .8000 and .7900.

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.

Tuesday, July 6, 2010

AUDUSD—update

Stopped at -45 pips. I'm studying it as to whether to go long.

GBPUSD—weekly channel

I'm still long from 1.4918. Cable reached a July 2 high of 1.5230 and, like other pairs, faltered this morning (at 1.5207) when it seemed to be trying to get back to it. There's still a possibility of at least 1.5374 (the weekly downtrend line). After that, it could reach 1.55 or so, the April highs. Also on the weekly chart, it has climbed above the 20 EMA (currently 1.5079) which had capped it the weeks of 4/16, 4/30 and 6/25. The weekly chart doesn't show strong momentum (as represented by RSI) so anyone going long at this point needs to use tight stops.

Resistance is at 1.5374, 1.5523 and 1.5816. Support is at 1.5079, 1.4874, 1.4710, 1.4696, 1.4590 and 1.4550.

Here's the weekly chart. My trade doesn't show on it as I use a different charting package for weekly and monthly charts.











© 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.

AUDUSD—at resistance

AUDUSD seems to have based at .8316/17 (two touches since 30 June) but it won't be confirmed as a double bottom until it exceeds the high between the two which is at .8510. It's high so far this morning has been .8498.

Since the pair is at resistance I took a small short position earlier this morning at .8478. This allowed me to have a tight stop, the number one thing a trader can do to limit losses. Momentum, as represented by RSI, looks somewhat sluggish, never a good sign. However, until the pair falls below .8432 (the short-term uptrend line) there's no reason to get very excited.

It's possible the pair is setting up a range from .8316 to .8510 in a flat correction. If the pair clears the top at .8510, it's possible AUDUSD is resuming its upward path and may get on track to achieve the price target of .9030 estimated from its double bottom in late May/early June.

Resistance is at .8510, .8565, .8645, .8737, .8861, and .8895. Support is at .8432, .8316, .8133, and .8067.

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—narrow range

Another pair that has been stuck in a narrow range since Friday, it may be starting to move. Well one can hope.

I had a small buy order execute at .8281 Friday but I had no enthusiasm for sticking with it over the weekend and closed at break even. The negative divergence on the hourly chart certainly didn't help. I sold this morning at .8304 and have already moved my stop to breakeven.

Just as the Euro may be in an ABC correction, this pair could be as well with the C wave completed. As with the Euro, it ended up between targets—C would have been.8265 if it had been .618 of A or .8326 if equal to A. What needs to happen is for the pair to start to drop, certainly below .8265 and then below .8218. I would have expected it to drop last Friday when it touched .8299 and then RSI fell below 70 on the hourly chart but it didn't. This is suspicious behavior which is why I keep moving stops to breakeven so quickly. However evidence is in favor of shorting as I wrote last week and short I am.

Resistance is at.8326, .8380 and .8400. Support is at .8265, .8218, .8180, .8107/00, .8068, .8000 and .7900.

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.

EURUSD—ranging

The pair has been ranging the last couple of days. I have two longs from 1.2400 and 1.2413. I just took some partial profits at +190 pips.

The high on Friday was 1.2611; the high so far this morning as of 5:14 AM EST was 1.2607. In between the pair dropped to 1.2480, narrowly missing my profit-stop and where, had I been trading, I would have probably added to my position. However, I may get another chance. The pair is just above a Fib confluence zone of 1.2589 and just under a daily speed line. This helps to understand its current struggle to push higher. With a recently completed doji on the hourly chart, much will depend on the behavior of the current candle as far as setting a near-term direction goes.

Assuming this is an Elliott Wave C, price targets were (or are) 1.2517 (.618 the length of A's 591 pips from 1.1876 to 1.2467) or 1.2743 (the length of A). 1.3108 is also possible if C extends to 1.618 that of A.

Price obviously made it above 1.2517. One would expect more of a drop than the intervening 1.2480 so we'll have to see. The current behavior could be a bull flag; if it is then the price target is 1.2944 (1.2611-1.2194=412 added to the breakout price of 1.2532). The May 3 low of 1.2937 lends some evidence for this as a reasonable target. If Euro can get above Friday's high with good momentum, I may add to my positions.

Resistance is at 1.2611, 1.2673, and 1.2743. Support is at 1.2480, 1.2435, 1.2409, and 1.2350. This shows layers of support so if it breaks below those then expect lower.

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.