GBPJPY—dropping

My short stopped out at +20 so I'm glad I took some profits when it was up at +68 pips. On the daily chart, the pair has dropped below the uptrend line from the March 16 low (see yesterday's blog). The low so far is 130.61, just a bit below Friday's low of 130.67. The May low of 130.29 is next, unless it can rally. Unless this is a fake-out, it's probably best to short rallies. There is positive divergence on the four-hour chart so a bounce may be in the works.

Resistance is at 132.08, 132.77 (June high) and 132.95/133.03/133.25, the 20- and 10-weekly EMA and 100 daily SMA respectively. After that are 134.50 (the daily chart downtrend line) and the May high of 135.14.

© Dianne Fecteau, 2011. 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.