EURUSD—near strong resistance

Euro is approaching strong resistance and looks as though price action might be bearish around 1.4720. On the daily chart, one can trace out an Elliott Wave corrective count with the double zigzag peaking at 1.4942. If the pair closes above 1.4734, this count will be invalid. This would be .786 of the move down from 1.4942 and would suggest further price moves up. However, the lovely thing here is that one can short and have a tight stop since the market would be giving a strong message with moves higher than 1.4734. If anyone reading this is long, tighten stops and possibly take some profits.

Beginning on May 26, yesterday was the eighth bar of a Tom DeMark sell setup with today being the ninth candle. The candles since the 1.3970 low have been robust—they have opened near the low and closed near the high so this is bullish. Price has also exceeded the .618 retracement of the move down from 1.4942. However, the bullishness may be close to a point where a consolidation would make sense. A .382 pullback would bring prices down to 1.4419 (close to the monthly pivot of 1.4445) and 1.4334 would be 50%. A move below 1.4300 would be very bearish.

On the four-hour chart (not shown), there is negative divergence with RSI—prices moving up but RSI moving down. My plan is to enter short and see how it goes.

Here is the daily 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.

GBPJPY—struggling

In line with my blog yesterday, I went long in GBPJPY at 131.08. I've locked in some profits at +68 pips but I'd like to see the pair do better than this. As it is, it's struggling with the 132 area, having reached a high of 132.08 this morning. That is only one pip higher than yesterday's high of 132.07. The .618 retracement of the move from 130.29 to 135.14 is 132.14.

One can trace out a five-wave decline on the hourly chart and, if this is so, the pair should be in a C wave with a potential high of 132.45 (where C would equal A) and 133.46 (where C is 1.618 that of A).

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.

Support is at 131.89/71 (daily 200 SMA and the low for the prior two hours), 130.67 (Friday's low), and 130.29 (May low). Below 130 would likely see additional price drops.

Here is the hourly 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.

GBPJPY—Friday doji

The Guppy dropped to a low of 130.67 on Friday, closing the day with a dragonfly doji. This can be a bullish signal as it means price had lower lows but price closed at the high of the day. Usually, though, it is more bullish if it occurs after a rise in price rather than a drop. Price has been dropping since the May 31 high of 135.14. One could view it as a hammer since there has been a drop in price. Price in the 130 area has served as support on several occasions and 130.29 was the low for May. The combination of the doji and being at support is enough to say that if price drops below 130, there may be further weakening. However, one could take a long position below 131with a stop below the doji. I will be watching momentum on the shorter time frames (4- and 1-hour) to see if I want to get into this trade.

If price manages to rally, resistance is close by at 132.77 (June high) and 132.95/133.03/133.25, the 20- and 10-weekly EMA and 100 daily SMA respectively. This is also near a round number. After that is 134.32 and 135.14, the high for May.

Here is the daily 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.

AUDUSD—nice drop

Aussie came through today, touching a low of 1.0603 a few minutes ago. A sustained close below 1.06 would be good news for the bears. I am bearish short-term but it is important to remember that the pair is still in an overall uptrend.

© 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.

AUDUSD—back at resistance

The Aussie drifted back to a high of 1.0753 overnight. Drifted is the correct word. The move did not have a lot of energy and one can see the lack of momentum in the diverging RSI on the one-hour chart. In doing this, it took out my short from yesterday at breakeven but I re-established it this morning at a better price.

As I wrote yesterday, on the daily chart, the picture appears corrective with a three-wave structure down to the 1.0441 price. The pair would be in the B wave. Given that the 1.0757 prior high was near the monthly 1.0746 pivot calculation as well as near the .382 retracement of 1.0724 (1.0257/1.1012), the fact that this is serving as resistance again this morning is significant.

It is true, though, that a pair that hangs around just below resistance can often break through it. Should it do so, the next resistance is at 1.0820 and then 1.0889. Support on the four-hour chart is at 1.0690 and 1.0634. The latter is the short-term support line but also at the 50% point of the 1.0257/1.1012 range. A break below 1.0600 opens up the possibility of
1.0567, 1.0441, and 1.0359.

Here is the one-hour 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.

AUDUSD—resistance

By any reasonable technical analysis on the weekly chart, AUDUSD is still in an uptrend. One could argue that the pair recently completed an ABC correction with the drop from 1.1012 to 1.0537 being leg A, the rise to 1.0889 being B, and the slump to 1.0441 being almost the point at 1.0414 where C would equal A. If this were true, then one would expect price to resume rising and to surpass the 1.1012 high. I do have price targets up to 1.14. However, the pair is stumbling a bit in a resistance area.

From the 1.0441 low, Aussie has reached a high of 1.0757. On the daily chart, the picture appears corrective with a three-wave structure down to the 1.0441 price. This rise, then, would be wave B, a remnant of the former trend. The high so far of 1.0757 is near the monthly 1.0746 pivot calculation as well as near the .382 retracement of 1.0724 (1.0257/1.1012).

I had a sell order on the table that was filled Friday at 1.0725. I have moved the stop to breakeven. A more reasonable stop would be just above the recent high (1.0757) but I have been out of the market for a few days and need to get my bearings back. I can always short again if this one stops out. If price moves above 1.0889, I expect that would mean the larger trend is resuming. Note that there is positive divergence on the four-hour chart.

If the price breaks below 1.0607, the downtrend line beginning at 1.1012 on the four-hour chart, support is at 1.0567, 1.0441, and 1.0359.

Here is the four-hour 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.

EURUSD—weekly and monthly

Last week, Euro closed above the downtrend line drawn from the 2008 highs. Price action today has moved above last week's high of 1.4325 to a high of 1.4424. The monthly chart shows an engulfing candle forming (outside bar) with a higher high and lower low than took place in April. This is occurring after four monthly candles with higher highs and higher lows. This is a warning of a possible trend change. The pair is also stuck in a confluence zone so it needs to move above 1.4490 to gain some real upward traction.

Look for support at 1.4194 (the downtrend line from the 2008 high) and 1.3969 (last week's low). Resistance is 1.4424 as well as 1.4490.

© 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.