USDCAD—potential double bottom on daily chart

USDCAD sunk as low as 1.0225 in yesterday’s trading. The prior low in mid-October was 1.0214. If the pair is basing (as I have frequently written here in the past few months) it should not close below 1.0214. Therefore, a long position can have a fairly tight stop. If 1.0225 was the end of a wave two correction then the direction should be up with nearby resistance at 1.0290, 1.0375, and 1.0405.

You could also make a case that there is a double bottom forming since the two lows at 1.0214 and 1.0225 are so close to each other. Double bottoms require confirmation. In this case, confirmation won’t be until 1.0853, the high of the peak between the two bottoms. That’s quite a bit of wait for that and I’d prefer to try a long near the bottom. A definitive break below 1.0214 would be a sign to get out of longs.

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.

EURCHF—near trend line

As I wrote Tuesday, I’m still short from 1.4928. My stop is 110 pips above breakeven. The pair is beginning to hesitate and it’s doing so near a trend line from October 2008. Its low was 1.4731 a few days ago. The daily candles have upper shadows as they’ve had all the way down this slippery slope so further lows may be in store. A definitive break of the trend line would probably encourage me to add to my position. There’s more support at 1.4695 and 1.4580. 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.

GBPJPY—nice drop as well

The yen pairs are all doing poorly and since the yen loves bad news (it gets stronger as things in general get worse) one has to wonder what’s going on. Regardless, I just took partial profits at +204 pips in my short from 149.84.

I wrote yesterday that the pair was coiling in a symmetrical triangle and I was lucky enough to be up when it hit the top. (This is luck, guys, that I was awake but what wasn’t luck was that I knew a triangle was there and didn’t have to think about whether I’d short or not if the pair saw that price level.)

The bottom of that triangle is 147.01 and 147 is also a psychological round number. I may take additional partial profits there. 146.00 is the next support after that. The first resistance is at 147.98 to 148.23.

I think the pair should bounce if it reaches 147 but we’ll see. 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.

EURJPY—now that’s a drop!

I wrote yesterday that I shorted at 132.90 and, just waking up and getting on the computer (why did I sleep late?) I found it hit my profit target for +244 pips. Had I been awake I might have moved the target lower because the pair is clearly weak and it has been in a broad range over the last year of 126.89 to 139.22.

There’s no clear evidence it will drop to the bottom of that range but it would be lovely, wouldn’t it? At least it would if you’re not long in the pair. At a low this morning of 130.30, it has a ways to go. Support is here at 130.50 so I wouldn’t be surprised to see a bounce but there’s no evidence right now it’s going to do so. It’s oversold on both the hourly and three-hour chart.

A case could be made for a head and shoulder pattern on the three-hour chart. I’ve traced it out. If that’s true, the target is 128.66.

If you’re not already short this pair, don’t try to catch a falling knife as they say. Wait, instead for a bounce and short the rally with a tight stop or look for a definitive close beneath 130.50 on at least the hourly chart. If you do the latter, make sure RSI isn’t climbing up from oversold as this could indicate a bounce.

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.

GBPJPY also down

All the yen crosses are weak this morning with a short I took in GBPJPY at 149.84 down 100 pips. I just took partial profits at +95 pips.

This pair is coiling in a symmetrical triangle on the three-hour chart and I just happened to be awake, although dopey, when it touched the top of the triangle this morning. Dopey is OK as long as you trade the chart in front of you as it turns out. Upper shadows on the candles and a lack of oomph in the RSI were signals that helped make the decision as well.

It’s currently in a general price support zone and the candle that just closed with it’s long upper and lower shadows indicates indecision. Additional support is at 148.57, 148.28, 148.07, 147.28 and 147.00. Obviously, if it starts to climb and closes above the triangle, that hints at a long position.

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.

EURJPY—weak this morning

After trying a long in the pair this morning and getting stopped out (-30 pips) I shorted at 132.90 as it broke down through support. It’s down 59 pips as I write this and I’ve moved my stop to just above breakeven. It’s at a far stronger support level now at 132.30 so I may lighten my position a bit. The near term potential for this pair is 131.42, the bottom of the range since December on the three-hour chart, and then much lower if you look at the range it has been in since last spring. I’ll make sure to have my deposit slips handy if that happens. 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.

USDJPY—negative signs abound

My long trade in USDJPY (from 91.15) reached a high of 92.04 early this morning (EST) and I took partial profits at +70 pips. I’m glad I did as it has since retreated a bit to a low of 91.66. I’m profit-stopped on the pair so I’m not too concerned about its behavior except to note that I may go short if it breaks definitively below 90.73. That would also be just below the uptrend line from late November. Unless it does, it’s still range-bound.

On the three-hour chart, the pair could be starting to form the right shoulder of a Head and Shoulder (H&S) pattern. It’s a bit too early to tell. There is also negative divergence between price and RSI. Both these things are bearish which is in line with the bearish sentiment surrounding this pair.

Another negative sign is that at least so far the retracement from the January 7 high to the recent low on the three-hour chart has been just at .382. If this is all it can achieve, then the up move is weak.

Resistance levels are 91.80, 92.50, 93.21, and 93.77. I’d probably take more profits off the table at each of those levels since sentiment is so bearish.

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.