Friday, April 29, 2011
AUDUSD—another new high
Ridiculous but welcome since I'm still long from .9940. I took profits on other position. New high this morning of 1.0964.
USDCHF—another new low
Damned if USDCHF did not find a new low at .8651, not too far below the prior low. Is it a retest of the low before a rally? Could be, but don't bet the bank on it. Price did not complete the symmetrical triangle I wrote about yesterday before breaking below—this indicates weakness and a potential price of .8537.
© 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.
© 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.
Thursday, April 28, 2011
USDCHF—struggling
Two days ago, USDCHF fell to a low of .8671 just above S2 of the weekly pivot calculation. As I wrote then, the low formed a hammer candle at weak support and there was positive divergence on the three-hour chart. The pair then rose to .8834 and dropped to .8689. On the one-hour chart, this looks clear as a potential ABC pattern. Leg C of this would be .8790 if C=.618 of A, and .8852 if it should equal A, or .8953 if 1.618A. The pair has only managed to rally to .8761 and here it is struggling.
The pair also appears to be coiling within a triangle. If this is a consolidation move and it breaks below it, the potential target is .8537. This aligns with some targets I have from Elliott analysis on monthly and weekly charts. Unfortunately, I have other targets lower than that, down to .7980 from point and figure work and from Elliott. A reader pointed out that a downtrend line drawn off the lows for the past 100 years is coming in but it looks as though the pair is threatening to break that. One would still expect a rally up to at least .8790 as the triangle legs aren't complete.
Interesting price behavior at interesting psychological extremes. Is there anyone who has a positive opinion about the dollar. On the other hand, who is left to sell except some weak hands?
© 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.
The pair also appears to be coiling within a triangle. If this is a consolidation move and it breaks below it, the potential target is .8537. This aligns with some targets I have from Elliott analysis on monthly and weekly charts. Unfortunately, I have other targets lower than that, down to .7980 from point and figure work and from Elliott. A reader pointed out that a downtrend line drawn off the lows for the past 100 years is coming in but it looks as though the pair is threatening to break that. One would still expect a rally up to at least .8790 as the triangle legs aren't complete.
Interesting price behavior at interesting psychological extremes. Is there anyone who has a positive opinion about the dollar. On the other hand, who is left to sell except some weak hands?
© 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.
Wednesday, April 27, 2011
GBPUSD—resistance
Can GBPUSD overcome its current resistance? On the weekly chart, there is a short-term downtrend line coming in from 1.6879 that had its second touch last week. The prior high is 1.6600; the high this morning was 1.6581.
I bought yesterday at 1.6457 based on the low of 1.6432 being near the .382 retracement of 1.6166/1.6600, the weekly pivot being at 1.6425, a prior breakout point at 1.6428, and the pair being near the bottom of a flag pattern on the three-hour chart. Obviously, I've locked in some profits and my stop is above breakeven.
The pair is down to a low of 1.6545 so far. This is near weak support at 1.6553/49. Additional support is at 1.6504, the breakout point of the flag pattern. If things look OK as to momentum and price if it returns there, I may add to my position. Beneath this is 1.6428/17.
I have price targets to 1.6953, 1.7045 and 1.7140 should the pair start to boogey.
© 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.
I bought yesterday at 1.6457 based on the low of 1.6432 being near the .382 retracement of 1.6166/1.6600, the weekly pivot being at 1.6425, a prior breakout point at 1.6428, and the pair being near the bottom of a flag pattern on the three-hour chart. Obviously, I've locked in some profits and my stop is above breakeven.
The pair is down to a low of 1.6545 so far. This is near weak support at 1.6553/49. Additional support is at 1.6504, the breakout point of the flag pattern. If things look OK as to momentum and price if it returns there, I may add to my position. Beneath this is 1.6428/17.
I have price targets to 1.6953, 1.7045 and 1.7140 should the pair start to boogey.
© 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.
USDCHF—new low
USDCHF fell to a low of .8671 just above S2 of the weekly pivot calculation. On the three-hour chart, this low formed within a hammer candle. Since the hammer is at weak support and there is positive divergence on the three-hour chart, let us see if the pair can overcome current resistance at .8765. Just above here is the psychological resistance of .8800.
I am almost positive that Bernanke can say something today to assure the dollar will continue to decline.
© 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.
I am almost positive that Bernanke can say something today to assure the dollar will continue to decline.
© 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.
Tuesday, April 26, 2011
USDCHF—at wedge support
On the weekly chart, the price has fallen to the bottom of a descending wedge (outlined in red) with the low at 87.46. This is taking place within the downward sloping rectangle. Bulkowski, in his book Encyclopedia of Chart Patterns, notes that there should be at least five touches with a minimum duration of three weeks. While wedges can be consolidation patterns of the prevailing trend, falling wedges can resolve to the upside simply because the steepest angle is usually more difficult to maintain. If price does break upward, it can move quickly. This is because energy is being stored up as the price moves become narrower. Note, too, that there is positive divergence on the weekly chart. However, as I wrote yesterday, one can go broke trading positive or negative divergence.
It would take a brave person to suggest buying the dollar at this point. After all, the sentiment against it is extreme. An extreme position never maintains itself in the markets but it can take time to resolve. Still, nothing continues straight down so there should be a reaction at some point.
A weekly close below the lower boundary of the wedge would be bearish. I have a target of .7980 on my daily point & figure chart. On a long-term monthly chart, one can make an Elliott Wave argument for .8500 down to .7500. S1 of the annual pivot is at .8520; S2 and S3 of the monthly pivot is at .8716 and .8513 respectively; S1, S2 and S3 of the weekly pivot are at .8758, .8653, and .8525.
Resistance is at the top of the wedge, near the round number 90. The next resistance is at .9150. This is the daily 50 SMA and this held price on the daily chart in early April.
© 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.
It would take a brave person to suggest buying the dollar at this point. After all, the sentiment against it is extreme. An extreme position never maintains itself in the markets but it can take time to resolve. Still, nothing continues straight down so there should be a reaction at some point.
A weekly close below the lower boundary of the wedge would be bearish. I have a target of .7980 on my daily point & figure chart. On a long-term monthly chart, one can make an Elliott Wave argument for .8500 down to .7500. S1 of the annual pivot is at .8520; S2 and S3 of the monthly pivot is at .8716 and .8513 respectively; S1, S2 and S3 of the weekly pivot are at .8758, .8653, and .8525.
Resistance is at the top of the wedge, near the round number 90. The next resistance is at .9150. This is the daily 50 SMA and this held price on the daily chart in early April.
© 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.
Monday, April 25, 2011
AUDUSD—comparison of two up trends
On the monthly chart, a comparison of two up trends is interesting as to time and price.
The current ascent began with the 10/2008 low of .6007 to the recent high of 1.0778. This was 4,771 pips over a period of 31 months. The ascent that began with the 4/2001 low of .4775 to the 7/2008 high of .9851, totaled 5,076 pips over a period of 88 months. The gains from 2008 have been 94% of those in the prior uptrend but in only 35% of the time. Has price gotten ahead of time?
Momentum, as measured by RSI, is also more gradual in the current up trend. Even with the meteoric rise the Aussie has been experiencing, RSI is not "overbought" (over 70). Nor has it achieved its prior highs—negative divergence with price. If ever there was a good example of how one cannot trade divergence by itself, this is it.
Look closer at the divergence though. Connie Brown, writing in Technical Analysis for the Trading Professional, discusses a positive or negative reversal, a hidden divergence. For example, I wrote the words positive reversal below the down slanting red line under RSI between 2003 and 2006. She describes this as the market building internal strength—price is higher but there is a new oscillator low. She provides a method of calculating price moves from these and, in this case, her method resulted in a price target of .9473, quite a bit lower than the .9851 high but arguably higher than one might have otherwise calculated at that point in time, especially if one let oneself be blinded by the negative divergence.
Another interesting characteristic of the chart is the AB=CD comparison. In the former uptrend, AB (4775/8010) was 3,235 pips. CD (6774/9851) was 3,077 pips. Close enough. In the current uptrend, AB (6007/9408) is 3,401 pips. If CD is equal to that, then the price target for CD is 1.1467. Far-fetched? Perhaps. If the pair made it to the top of the upward sloping rectangle, that would be about 1.15. I also have a daily point and figure target of 1.14.
As I wrote last week, that the Commitment of Traders report is near an extreme of non-commercial longs to shorts. Extremes are not a good thing. However, you cannot trade that either. Even if the Aussie suffered a sharp correction, the overall trend from .4775 is up with two touches of the trend line.
Resistance is between 1.0750 and 1.0830, then 1.0900. Support is at 1.0583. Additional support is at 1.0444, 1.0390, 1.0289, 1.0248 and 1.0205.
For those who trade on shorter periods than the monthly chart, there are many opportunities to buy and sell but buying pullbacks has obviously been a good strategy for the last several years.
Here's the monthly chart.
© 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.
The current ascent began with the 10/2008 low of .6007 to the recent high of 1.0778. This was 4,771 pips over a period of 31 months. The ascent that began with the 4/2001 low of .4775 to the 7/2008 high of .9851, totaled 5,076 pips over a period of 88 months. The gains from 2008 have been 94% of those in the prior uptrend but in only 35% of the time. Has price gotten ahead of time?
Momentum, as measured by RSI, is also more gradual in the current up trend. Even with the meteoric rise the Aussie has been experiencing, RSI is not "overbought" (over 70). Nor has it achieved its prior highs—negative divergence with price. If ever there was a good example of how one cannot trade divergence by itself, this is it.
Look closer at the divergence though. Connie Brown, writing in Technical Analysis for the Trading Professional, discusses a positive or negative reversal, a hidden divergence. For example, I wrote the words positive reversal below the down slanting red line under RSI between 2003 and 2006. She describes this as the market building internal strength—price is higher but there is a new oscillator low. She provides a method of calculating price moves from these and, in this case, her method resulted in a price target of .9473, quite a bit lower than the .9851 high but arguably higher than one might have otherwise calculated at that point in time, especially if one let oneself be blinded by the negative divergence.
Another interesting characteristic of the chart is the AB=CD comparison. In the former uptrend, AB (4775/8010) was 3,235 pips. CD (6774/9851) was 3,077 pips. Close enough. In the current uptrend, AB (6007/9408) is 3,401 pips. If CD is equal to that, then the price target for CD is 1.1467. Far-fetched? Perhaps. If the pair made it to the top of the upward sloping rectangle, that would be about 1.15. I also have a daily point and figure target of 1.14.
As I wrote last week, that the Commitment of Traders report is near an extreme of non-commercial longs to shorts. Extremes are not a good thing. However, you cannot trade that either. Even if the Aussie suffered a sharp correction, the overall trend from .4775 is up with two touches of the trend line.
Resistance is between 1.0750 and 1.0830, then 1.0900. Support is at 1.0583. Additional support is at 1.0444, 1.0390, 1.0289, 1.0248 and 1.0205.
For those who trade on shorter periods than the monthly chart, there are many opportunities to buy and sell but buying pullbacks has obviously been a good strategy for the last several years.
Here's the monthly chart.
© 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.
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