AUDUSD—Ranging

AUDUSD is stuck in a narrow range of .9116 to .9196. I’m still in my short from .9152. Is it worth staying in? Have things changed since I entered based on a general, overall weakening and the gravestone doji on the three-hour chart? Don’t forget that because the Australian dollar pays much more interest than the USD, I’m paying interest on this trade. The interest isn’t a big deal with small positions but the larger the position the more significant it becomes.

The answer is unclear. One thing I keep mentioning in the blog is that usually pairs don’t suddenly plummet down from a top. Topping and bottoming is a process that takes place over many hours and even days and weeks. During that period, the action can be whippy. If you look at the three-hour chart you see indecision in the form of the candles—they’re small or have significant upper and lower shadows, interspersed with some longer ones.

What hasn’t changed is that the pair is exhibiting weakness. It certainly isn’t in the robust climb that it has exhibited through much of the spring, summer, and fall. However, while the pair is heading for the bottom of the range after a day of hovering about in the upper third of the range, there’s support here that may hold. As of now, I’ve lightened my short at +20 pips and have moved the stop to breakeven. I’m winding down for the week so I may not get to do much more with any pair before Monday. If the pair should make it down to the trend line at .9050, it would be an interesting place to assess buying. A break above .9200 would hint at returning strength.

Remember, liquidity is shrinking as we approach the holidays. This can result in exaggerated moves that don’t make a lot of sense. Here’s the three-hour chart.



© Dianne Fecteau, 2009. 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.

EURJPY—Bounce

I’ve been short EURJPY forever it seems (since Tuesday, the 8th, at 133.03 which gives you some sense of how time can be distorted when trading). However, for me to stay in a pair is unusual unless the pair is strongly trending. It never reached the bottom of the range and I should have probably closed it out but I’ve taken partial profits several times at +43, +180, +264, and +360, so I’m not too concerned about the small position left which is profit stopped at +120 pips.

It’s hovering in the middle third of its range. This range is from 126/127 on the bottom (with one dip down to 124.38) to 138/139. On the hourly chart, it looks as though it’s rebounding and is approaching the 50% retracement of its recent dip. It’s going to have to push through current resistance at 131.50/80. 132.50 and 133.23 are the next resistance levels. Support is at 129, then 127. I believe there will be another opportunity for a short at some point, although perhaps not today. Here’s the daily chart:


© Dianne Fecteau, 2009. 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—another day of little action

It would have been a good morning to go holiday shopping. Nothing much is happening with currencies in general.

Looking at the daily Euro chart, I’d say there’s more probability of it breaking down than up although the latter isn’t impossible, of course. The first thing to notice is the broadening pattern at the top. Some traders believe that the more horizontal the tops (and these are), the more likely it is to see prices break downward. Notice, too, that the third peak didn’t quite reach the top line of the formation. This is also bearish, hinting that price will break downward. Before it does so, it could try one more run to the top of the pattern (1.5230).

Another thing to look at is RSI. Notice here that the level to which RSI has dropped is lower than it has done since April. I’ve drawn a red support line under RSI to illustrate this. In addition, buyer interest hasn’t pushed RSI above 63% since October. This is quite different from the forays into overbought readings that were taking place throughout the year.

Finally, Euro has broken and closed below the daily uptrend line from April.

From these hints on this daily chart, it looks as though the Euro is weakening. That said, though, there could be another bounce up as I mentioned above. If it’s going to drop further, I’d love to see a close below 1.4627, the November 3 swing low (I’ve placed a red arrow there). If it does rally, I’d short again near the top of the broadening pattern and/or on candle weakness. For a rally, note the potential double bottom that’s forming. It requires a close above 1.4860, to confirm this. A close above the prior high of 1.5144 would be super-encouraging to bulls.

Here’s the daily chart:



© Dianne Fecteau, 2009. 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.

Another note on AUDUSD

I consider the doji invalid if there is a close above its high. So far, on the 1- and 3-hour charts, this hasn’t happened. However, I’m getting a bit annoyed with this pair. My trading experience tells me that when a pair, especially one that has been bullish, hangs about at resistance, it often is getting ready to break above it. If it does, my short may become a stop and reverse. We’ll have to see.

© Dianne Fecteau, 2009. 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.

AUDUSD—slight bounce

What was left from my long trade from two day’s ago profit stopped out at +5 pips in yesterday’s dip.

As I wrote yesterday, the pair looks a bit weaker than it did. After a few days of lower highs and lower lows, yesterday had a slight higher high and higher low. This may have been just a minor correction before another push upwards. It needs to break above .9406 to know for sure.

Both the three- and one-hour chart formed some interesting doji candles this morning. Doji candles can indicate trend reversals after an uptrend, even a small one such as what we saw overnight. For that to be the case, though, additional candles must confirm its signal, the market should be overbought, and the doji should be relatively rare on the chart. It’s important to remember that even if all three of these conditions exist, it doesn’t guarantee a trend reversal (there are no guarantees in trading, alas). It might only signal that the market is going to move sideways a bit.

On the three-hour chart, you can see a gravestone doji. After such a long bullish candle before it, I would have liked to see the third candle complete an evening star formation but it didn’t do so because it didn’t penetrate deeply enough into the bullish candle’s body. It should have looked like this:



Instead, as you can see, the third candle, while somewhat bearish was not very long. So far, no candle has confirmed the signal from the doji. However on the one-hour chart, there is what looks like the possibility of an evening star when the candle completes at 8:00AM.

Neither is the market overbought or oversold. What is interesting is that momentum seems sluggish as measured by RSI. It’s not shooting up on this small price rally so there doesn’t seem to be a lot of interest in the pair.

There aren’t numerous doji candles on the chart so one should take note of this one, however. One thing that reinforces it is that the market is at resistance. This means the stop can be tight, just above the doji high. I’d be a little careful with this since there’s an upper shadow that extended to .9188, several candles back but the stop can still be tight. Price is also at a fib confluence zone that I’ve indicated with the purple line. This reinforces resistance. Because of this, and given prior weakening signs I’ve written about, I decided to try a short position as you can see. Here’s the three-hour chart.


© Dianne Fecteau, 2009. 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.

Euro—kind of a boring day

Not a lot of price movement, today. Euro has been trading in a rectangle since yesterday afternoon of 1.4668 to 1.4782, with most of that action confined to north of 1.4692. If you weren’t already in a trade, you could have been in and out today for small pips but that’s a hard way to make a living and not a lot of fun, either. I’m still short Euro from 1.4822.

The pair will likely drift down to the bottom of the range. There it will either show signs of a rally, break below, or stagnate. That’s so definitive, isn’t it? Alas, that’s honestly all there is to say for now and you can’t force a signal where one doesn’t exist. We’ll just have to wait and see.

Meanwhile, perusing some blogs and websites yesterday, I’m reminded yet again of how many ways there are out there for traders, especially new ones, to be separated from their money. Things such as “can’t fail” systems, automated signal providers, useless webinars, and on and on it goes. Remember the old saying? Those that can, do; those that can’t, teach. There are far too many “teachers” out there who want to charge for their products and services and who have no verifiable history of being able to make money in the market consistently. Don’t fall for this stuff. Everything you need to know is in books that are available for far less than the $99 to $9,999 price range and with blogs such as mine there is a lot of information available for free. Secrets of the ages or RSI, etc. It's all hooey.

AUDUSD—a tentative long

Yesterday I went long at .9041. I took some profits this morning at +50 and have moved my stop to breakeven +5.

As I’ve pointed out earlier this week, this pair is showing some weakness. However, given its strong, bullishness, I wouldn’t expect it to just roll over without a fight. After the low early yesterday morning, it looked as though it was trying to stabilize, Note, today, that it seems to have backed away from resistance at .9114. The candles developed upper shadows. This hints the market was rejecting higher prices. If you study that line on the hourly chart, I’ve placed arrows where price has touched it and retreated from it several times. It’s polarity. It’s also the .618 retracement of the recent move down. Let’s see if it holds as resistance again. If it does, a short might be in order. This means I may reverse when stopped at breakeven, or earlier, if other clues present themselves before then. However, remember we’ve had four down days so a bounce may be at hand.



© Dianne Fecteau, 2009. 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.