EURGBP—triangle

EURGBP has generally been in an uptrend since late last June but the dip to .8285 was disappointing since it was a lower low than the prior dip to .8335. That's not a huge amount of pips but it's a warning. There are lots of triangles around these days and EURGBP is no exception. Bulls expected price would reach the upper boundary around .8826 before turning but it failed at .8672, quite a bit short of that and just pips above the 12/31 high. The upper boundary is near fib confluence of .8849/10 (.5 and .618 of the move down from .9412 and .9134 respectively). Perhaps it will get there in the next few days but obviously it has to close above .8672. Looking at the large bullsh candle before the last couple of day's pullback, it seems possible. Support is at confluence at .8505 and .8424/00 and then the trend line at .8348. A close below .8285 would bring in support at .8143 and .8068. My inclination is to buy near there or possibly at present levels if momentum shapes up on the shorter term charts.

Here's a 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—triangle

On the daily and three-hour chart, one can observe an obvious triangle. From the Elliott perspective, price entered the triangle from an uptrend. Therefore, price should break upwards. If it does so, 1.0307 is the target (453 pips added to the breakout point of the triangle). There is an unconfirmed double bottom in January (.9804 on 1/11 and .9833 on 1/20). It will be confirmed if price breaks above 1.0077. Its price target is 1.0350. So there are two price targets within pips of each other. 1.0364 is also where some resistance lines come in (i.e. see the prior post for the weekly chart—the upper wedge line ends there).

On the three-hour chart, one can observe a diamond pattern. When these patterns succeed, price often moves rapidly. A break upward, though, would bump its head on fib confluence at .9974 but the real interest will be in price behavior if the pair approaches 1.0022 and 1.0083 (.618 of the move from 1.0257 to .9804). If it slices through those, then expect an attempt on 1.0183, 1.0257, and price targets in the 1.03 area. Failure from the triangle targets .9916, .9867, .9804, .9740, .9691and .9538.

Here's a three-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—weekly chart

Aussie is throwing off some conflicting signals and I have price targets in both directions from both the longer and shorter-term charts. However, the longer-term uptrend has not been definitively reversed despite a break of the shorter-term trendline from June 2010 and some bearish candles.

Price has been hanging around just below the red broken uptrend line and since that line is resistance, I consider this bullish—there's just not enough selling coming in to overwhelm the bulls and push price down even after the bearish break. I'm wondering if the short-term "fundamental" news—flooding and potential cyclones—isn't driving this downward move. Note the wedge (the red lower line and the blue upper line both pointing upwards to a meeting point in the next couple of weeks). Rising wedges tend to break downward because the steepest angle is the least sustainable. Prices have dipped below the wedge but usually once they break below they fall rather quickly. This hasn't happened.

Weekly support is at .9797 (weekly 20 EMA), .9537 (December low),.8770, .8067 and .7920 (weekly uptrend line from 2008). Weekly resistance is at 1.0086 (broken uptrend line), 1.0183 and 1.0257)

Here's the weekly 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.

Week Ending 28 January 2011

Here are the highs, lows, and closes for the past week:
















© 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.

Currency market today

In a recap of the week so far as of 9:05AM EST:

AUDUSD had its high on Monday of 1.0022, peeked back above parity on Wednesday with a lackluster 1.0002, and was disappointing in general to its bullish fans all week. The pair closed yesterday at .9891, only five pips less than last Friday but still above its 100 and 200 daily moving average. It's currently attempting a rally. It has reached a high of .9988 this morning, a resistance price. If the current hourly candle closes significantly lower, there will be an evening star formation and a good hint of lower lows to come. Resistance is at .9988, 1.0020/56/77, and 1.0183. Support is at .9887, .9804, .9690, .9612 and .9544/32. Potential price targets in the event of continued lows are .9740, .9490, .9420, .9213 and below.

EURGBP has had a nice week so far, closing yesterday at .8628, 114 pips higher than last Friday's close. It's above all its daily moving averages. With a low yesterday of .8582, it's sitting on key support. Resistance is at .8648 and .8751. I suspect there will be sideways movement going into next week.

EURJPY had its happy day yesterday when it blew through resistance and touched 114.01. It's slipped to a low of 112.67 this morning and this calls into question whether the 10 daily moving average will make it above the 100 and overtake the 200 which it was poised to do. On the weekly chart I pointed out how the pair had overtaken its downtrend resistance line so we'll have to see whether it can pull off additional moves back up to the top of the trading range at 115.69.

EURUSD continued to do generally well this week, reaching a high of 1.3759 yesterday. Thursday's candle was a doji indicating indecision in the market. Elliott Wave interpretations as well as other calculations are bearish for the most part but there is definitely some thrust to this move up. Still, price has to close above 1.3860 for the bulls to continue their excitement. The pair has been hanging about in a fairly narrow range since its high so additonal moves upward are indeed possible. If it can close above 1.3860, 1.4060 and 1.4282 would be the next challenges. I don't expect it to stumble much today but if it does look for support at an overnight hourly hammer candle of 1.3679 and then 1.3637, 1.3573, 1.3500 and 1.3457.

GBPJPY had a splendid week, reaching to a high of 132.67 before it was smacked down to a low of 130.77 this morning, a 50% retracement. I'm glad I grabbed profits yesterday morning. However, given that this pair has broken above its very long term downtrend line on the weekly chart, it's possible there's going to more upside in store. Support is likely at 130.73/58 and 129.52. Depending on momentum behavior if it approaches those levels, I may buy in again. Resistance is obviously the 132.67, an area it's been battering at since last week. Above that is 133.00 and 134.00.

GBPUSD sank Tuesday from 1.6010 to 1.5751 and the close yesterday was 104 pips down from last Friday's. Cable is above the 20, 50, 100 and 200 daily moving average crossing under the 10 this week. It's trying to rally touching 1.5967 earlier this morning. It needs to close over 1.6059 in order to generate more bullish sentiment. A drop to 1.5830 would hint at lower lows to come.

USDCAD was dull, dull, dull this week, hovering between .9912 and 1.0004. It can't stay this dull much longer.

USDCHF has two key prices to watch—.9300 on the downside and .9623, the high on Monday, on the upside. Dropping below the .618 retracement of .9485 was a bummer and at the moment it looks as though it's going to make it back to .9300. If it can get to .9000, it's probable it will use that as a base. Shorting rallies seems the way to go as long as it doesn't close above .9623.

USDJPY managed to close yesterday only 15 pips above last Friday's close despite a rally that took it 83.21 in one bullish hourly candle in early trading Thursday morning in London. Who was responsible for letting the horses out of the barn that hour, I wonder. Despite a continuation triangle yesterday on the hourly chart, the pair plunged back to a low of 82.06 this morning. There's hope for this pair if it can hold above 81.85.

© 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.

GBPUSD—weaker

Cable is hanging around just below confluence. A break below 1.5880 and then 1.5853 would signal that it can't carry another advance into the 1.6000 region. The pair needs to get above 1.6059 to hint at a bullish uptrend and higher highs.

© 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.

EURUSD—at resistance

Euro's overnight low was 1.3637 and that's a support level to watch. The stalling doesn't mean the uptrend is over but a break below that would be significant. To maintain a bullish outlook it needs to break 1.3759/86 and then 1.3860. Since it's hovering around below that resistance, the chances are reasonable that it will make the break.

© 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—breached resistance trend line

USDJPY has poked its head above the downtrend line that began in May of last year, possibly in reaction to S&P cutting Japan's bond rating from AA to –AA. Still, a break of a trend line is a break of a trend line and shouldn't be ignored. If the week's close is above the line it strengthens the case that the pair is basing.

If this is an ABC correction on the daily chart, then the potential targets for C are 83.54, 85.14 and 87.74. At 87.74, USDJPY runs into resistance from a speed line. The December high was 84.53; the September high, 85.93.

81.86 should hold if there's to be more upside. Below that is support at 80.94 and 80.31.

Here's a 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.

AUDUSD—still in triangle

It's impossible to know at this moment whether the overnight low of .9877, point E, has been reached in the triangle. It's not quite at support of .9850 so a bit further push down is possible. If .9877 was the low then it strengthens the case for an upside breakout. An upside breakout also makes sense within the context of the overall, larger trend. However, in the larger, weekly picture, there are bearish signals such as the bearish candles on the weekly chart from November and early January and the break of the daily uptrend line from June. A definitive break below the triangle would lead to the conclusion that the 1.0257 was part of a topping formation. However, there is still the unconfirmed double bottom in January (9804 and 9833 with the confirmation point at 1.0077) and a target of 1.0350.

So, still sideways for now with the key prices being 1.0022 (better 1.0070) or below .9850 and better .9804.
I don't think this will continue much longer. If price drops to .9855, monitor it carefully as that is the nearby support for the triangle's last leg down.

Support is at .9855, .9804, .9691, .9612 and .9544/32/15. If the pair gets above 1.0077, resistance is 1.0183, 1.0257, and 1.0300/50.

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—broke above triangle

Yesterday I posted the 15-minute chart of EURJPY and it did indeed break out to the long side as expected. I added another position yesterday afternoon at 112.70 in additon to the existing long position at 112.18. In breaking from the triangle, it managed to cut through the resistance zone that was holding it below 112.92 and has reached a high of 114.01 just a few minutes ago.

With the break above the long downtrend line on the weekly chart that I blogged about yesterday, it wouldn't be unreasonable to expect we're in some sort of larger correction and the top of a range that goes back to September 2009 at 115.69 is in sight. After that 116.48 is the .382 retracement of the move down from 170.01. Above that are highs in the 128 and 138/139 area.

However, nothing moves in a straight line. The pair has exceeded the target for the triangle at 113.50; it's overbought on 15-minute and one-hour charts. There's also a rounding on the top of the 15-minute chart that hints at traders taking profits. So it wouldn't be unreasonable to see some sort of pullback.

If the pair begins to break down, support is at 113.50, 112.92, 111.83, 111.25, 110.32, and 109.59/52 (price low and fib). Below that would hint at 106.83 and of course below 105.43 would resume the larger downtrend. I will probably add to my positions on a pullback.

Here's the 15-minute 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—triangle

On the 15-minute chart of EURJPY below one can see it in a symmetrical triangle. From an Elliott Wave perspective, the breakout should be to the upside. I don't trade such short-term charts but I'm already long from 112.18 and I check the shorter-term charts periodically to see if there are any signals that support or negate my positions or that give clues about pullbacks. In any case, as I wrote in the blog post a few minutes ago, there's lots of resistance to get through up to 112.92 so let's see what happens.

Here's the 15-minute 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.

USDCHF—second test of .9400

Since yesterday, the Swissy has made two tests of the .9400 psychological barrier on the three-hour chart. If it loses this fight, the next support is the 12/31 low of .9301. Beneath that are price targets in the .9000 area.

© 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—weekly

EURJPY is another pair that has closed above a long-term trend line. The low is more recent than the Guppy's was (Aug. 2010 versus Jan. 2009 for the Guppy). However, until the pair breaks below the 105.43 low, it's possible this swing low was one to build a base upon.

This pair may be being pulled by the Euro's move up as there's an 80% correlation on a daily basis currently. As I blogged earlier this week, there's fierce resistance in the 112 zone, all the way up to 112.92. In additon, 115.69 is the top of a general range that goes back to September 2009. 116.48 is the .382 retracement of the move down from 170.01. Above that are highs in the 128 and 138/139 area.

If the pair begins to break down, support is at 111.83, 111.25, 110.32, and 109.59/52 (price low and fib). Below that would hint at 106.83 and of course below 105.43 would resume the larger downtrend.

Here's the weekly 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—weekly

Taking a look at the weekly chart below, one can see that the pair has managed to break above a long-term downtrend resistance line that has had three touches. This raises the question of whether the pair is using the recent low of 125.51 to base. If the Guppy can climb and close above the 134.23 November high, the question becomes a possibility. 132.52 has been the most recent high where it ran into resistance from confluence. The real test is whether it can sustain a close above 134.23. If it can, then the potential is for a move to 137.79, 139.38/87 (confluence) and 145.98.

If it gets to 134.23, many traders, still driven by the substantive downtrend, will short. That's why a substantive close, preferably on a weekly basis, will be necessary for continued bullish movement. Still, one needs to keep in mind that this quite formidable trend line has been breached for the time being. 169.39 would be a .382 retracement of the entire move down so there's room for some good profits if it does continue up.

129.50 is the first support. Below that is 128.99, 127.50 126.73/46, and 125.55.

Here's the weekly 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.









© 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.

AUDUSD—triangle

.9998 was the best AUDUSD has been able to accomplish since yesterday and it has since fallen back a bit in what looks like a descending triangle. I thought .9993 would cap so it's almost right where it should be.

If you give the triangle an Elliott Wave interpretation then it's going to break in the direction from which it came which is upward. Before that happened you'd see a move down to or in the direction of point E. That makes sense given the overall uptrend of Aussie. There's no definitive sign the uptrend is over yet although there are bearish possibilities. On the shorter-term charts, momentum is not robust. What one can say with some certainty is that the current price movement is sideways. Only a break above 1.0022 (better 1.0070) or below .9850 and better .9804 will provide some direction.

On the plus side, there's a possible double bottom in January (9804 and 9833 with the confirmation point at 1.0077) and a target of 1.0350. Or, if one is bearish, the whole mess at the top is some sort of topping pattern but the confirmation won't be until .9537 is broken. As long as it stays below 1.0077 and better 1.0022, that's a reasonable outlook and those must be stops for any shorts at this point.

Support is at .9850, .9804, .9691, .9612 and .9544/32/15. If the pair gets above 1.0077, resistance is 1.0183, 1.0257, and 1.0300/50.

Here's a 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.

EURUSD—hovering

Euro has been hovering just below the 1.3717 resistance since yesterday (it touched 1.3721 in early London trading). The stalling here is normal as some take profits so it's not indicative the move up is over. In fact, hovering just below resistance is often seen as bullish. I'm still long from 1.3587 but took some partial profits at +75 pips.

It needs to break 1.3786 and then 1.3860 for the bulls to stay hopeful. If it can do so, the next serious resistance is 1.4060 (weekly downtrend line from 12/2009) and 1.4283 (November high).

Strong support is 1.3650. Below that is a short-term uptrend and speed line at 1.3624/12, 1.3573, 1.3500, 1.3457/31, 1.3396, 133.44 (uptrend line from early January) 1.3245/20/00 (strong), 1.3154 and 1.3000 (big psychological). I may add to my long position if it drops to 1.3624/12 and the price and momentum behavior look good.

© 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.

EURUSD—small dip

The Euro wobbled a bit this morning, dipping to 1.3573 but above yesterday's 1.3431 low and the pssychological 1.3500. I took advantage of the dip to buy at 1.3587 although I had to grit my teeth to do so because there are negative signals as well as positive ones. Isn't that often the way?

My short-term outlook depends very much on how Euro behaves as it struggles with the 1.3686 high that has capped it the last 24 hours. The fact that it's back here after a mild dip means it's battling to get through. This is formidable resistance since it's near or at a speed line from the daily chart, a fib, and the lower boundary of the uptrend channel that the pair fell below in November. So good luck with getting through that.

My longer view is bearish as I've previously blogged. The pair would have to close above 1.4000 for me to change that view. But in the interim, there are enough buyers out there it seems to keep the bears from taking complete control, though they're sending out signals through such things as divergence on the three-hour chart.

Resistance is at 1.3686, 1.3717, 1.3800, 1.3860, 1.4060 (weekly downtrend line from 12/2009) and 1.4283. Support is at 1.3573, 1.3500, 1.3457/31, 1.3396 1.3245/20/00 (strong), 1.3154 and 1.3000 (big psychological).

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.

AUDUSD—choppy

AUDUSD ended the NorAm session yesterday resting atop confluence after a high of 1.0022. This morning, it dropped to .9895. The pair never managed to retrace .618 of the most recent move down; last week saw a break of a major trendline; the weekly candle was bearish with its upper shadow. Unless Aussie can overcome last Thursday's high of 1.0077, the focus is on the downside.

Support is at.9804, .9690, .9612 and .9544/32. With the downward pressure, I'd expect .9993 to cap. However, keep an eye for changes upward at some point. The pair is in an overal uptrend and this could be a very limited correction. On the weekly chart, one can see how shorter trend lines continue upwards with no break yet of the weekly ones.

Here's a weekly 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.

USDCHF—taking a beating

It looks as though even though USDCHF had a potentially bullish week last week with a longish lower shadow and even though there was a bull flag on the daily chart that targeted 1.0388, the pair is getting beaten up this morning. .9486 was the .618 retracement of the move up to .9784 and the low this morning so far is .9473.

Closing below .9432/19 threatens a return to .9300 and brings back into play price targets for additional lows.

© 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.

EURUSD—weekly

The Euro had a bang-up week last week, closing at 1.3618.

On the weekly chart, the pair has aggressively climbed back above the broken downtrend line, suggesting an optimism for the pair, based on what besides hope (always dangerous), I do not know. Regardless, that's two weeks with a higher high although only one with a higher low.

The high a few minutes ago was 1.3649 and there's little reason to not believe the hopes can carry the pair to 1.3786, the November high. 1.3578 was the 50% retracement of the move down from that high to 1.2874; 1.3744 will be the .618 retracement level and a place where there will most likely be some profit-taking from those who haven't completely drunk the Kool-aid that turns otherwise reasonable people into frothing at the mouth Euro bulls. However, if those bulls get it above 1.3860, the stage will be set for hopes to the 1.4060 (downtrend line from 12/2009 on weekly chart below) and the 1.4283 high. I'd definitely short there.

The move up on the weekly chart doesn't look impulsive so it must be corrective if examined from an Elliott Wave perspective. Note, too, that RSI is still below its uptrend line. The expanded flat nature of the correction could carry it higher. However there may be short-term opportunities for longs.

Support is at 1.3500, 1.3457, 1.3245/20/00 (strong), 1.3154 and 1.3000 (big psychological).

Here's the weekly 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—nudging above resistance

All the Euro crosses are nudging up this morning, following the Euro and this pair is no exception, reaching a high of 112.77 so far this morning, just above last week's high of 112.50. The weekly close was at 112.47 so bulls have control. I'm long from 111.89.

As long as the pair can keep nudging higher and get above the potential C wave target of 112.92 (.618A) as well as fib, MA and price resistance in this area (big resistance), I don't see any real resistance until 113.71/114.00, a weekly downtrend line from October, price target, and a round number. After that is 115.66, 116.09, and 116.68.

© 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.

EURGBP—nudging above resistance

EURGBP's range last week was .8332 to .8530 with a close near the high at .8514. This morning's high so far is .8536.

The cross is riding Euro's shirttails in its rebound. It remains to be seen whether it can sustain a break above .8530 and get to .8646 (January's high). If it can do so, resistance is at .8646, .8870,( weekly downtrend line from 3/2010), .8941, and .9175 (weekly downtrend line from 3/2009).

On the three-hour chart, the move up looks corrective in three waves. Support is at .8332, .8296/85 (weekly uptrend line from July and prior low), .8143, and .8068.

© 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.

AUDUSD—correcting

AUDUSD reached a low of 9833 last Thursday and is enjoying a bit of a zigzag correction. This could carry it to .9945 or .9988. The high so far this morning has been .9931.

I'm short in the pair and unless it gets above 1.0077 (last Thursday's high) shorting seems the way to go. Possible targets are .9740, .9490, .9213 and below.

However, and it's a big however, this pair is like one of those plastic dolls you punch and it bounces right back. Aussie is still in a long-term uptrend until proven otherwise. This means stops must be tight and reversing on a break might be reasonable.

The break of the daily uptrend line from last May was a hint, not a certainty. Last week's candle was a doji whose upper shadow is potentially bearish. The week ended with a higher high (by 57 pips) and higher low (by 12 pips) from the prior week. The close was .9896 versus the prior week close of .9888, both down from the first week of the year.

Besides the 1.0077 high, the other four closes last week were at or below 9951. The break from the daily downtrend line was at .9962 and just above that is fib confluence. So resistance remains in the .9900 area and then 1.0077 and 1.0183, 1.0214, and 1.0257. Support is at .9916, .9804, .9690, .9612 and .9544/32.

© 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.

Currency market today

In a recap of the week so far as of 8:57 AM EST:

AUDUSD stumbled around this week, closing yesterday at .9878, just 10 pips below where it ended last Friday. Its high has been 1.0077 this week so unless something radical happens today, this week will end with only a slightly higher high and low than last week. Breaking a daily uptrend line was not good news and probably set off a round of covering for long positions taken when Aussie still looked as though it could get to 1.03 and above. Resistance is at .9900 (high this morning so far is .9903), .9916, .9982, and 1.0020/56. Only a close above that level (not likely today) would open a door to 1.0183, 1.0214, and 1.0257. Support is at .9804, .9690, .9612 and .9544/32. Overall, I'm bearish, looking at possible targets of .9740, .9490, .9213 and below.

EURGBP has been rallying this week and reached a high this morning of .8530. Bullish behavior as long as it closes above .8500. There's strong resistance just above with the 100 daily SMA at .8534 and the .618 retracement of the most recent move down at .8512.

EURJPY bounced this week, moving from a low of 109.58 on Monday to a high of 112.26 this morning. This has probably shaken out most of those who were short so there's likely to be stalling. There's a possibility the pair could get back to 115.69, the top of the general range that harkens back to September 2009. From there, I'd short for sure. Before it reached that price EURJPY must scale strong resistance in the 112 zone with fibs, price highs and the 200 daily moving average working to hold it down.

EURUSD did well this week, confounding some of the bears who were squeezed throughout the week. 1.3244 was Monday's low; the high this morning so far is 1.3567. The potential is there for a move up to the 1.38 area as I've been blogging but first, one would want to see a close today above 1.35. This is doable. None of this negates the overall bearish pattern. Only a move above 1.3860 would make things look more positive, possibly signaling a return to the 1.4282 prior high.

GBPJPY was another pair that marched up this week from a low of 130.99 on Monday to a high yesterday of 132.27. Guppy is staying above 132 so far this morning. However, the weekly 10 EMA has been capping the pair in the past. That is currently 132.92. I'm planning to short around 133.00 but obviously I'll be watching price behavior closely. There's a possibility of the pair reaching 134.20 before keeling over in exhaustion. Good support is at 131.60.

GBPUSD looked good this week on a day-to-day basis but now looks as though it's weakening. Yesterday's close was 1.5932, only 9 pips above last Friday's close. It did reach a high of 1.6059 on Tuesday (which is nothing to sneeze at) but a weekly close of 1.6000 is what it will take to keep bulls happy and the bears on the defensive. If it drops below Monday's low of 1.5836, that will increase pressure on the Cable and 1.5600 and 1.5475 are the next supports.

USDCAD had an interesting week, being given up for dead with its recent lows of .9849. This is one of the times that the bearish sentiment caught me up in its clutches (and one of the reasons I usually read very little commentary during the week). I had a target that I blogged about on Tuesday of .9850 and I bought at .9860. Had I stayed in that position, I would have been fine but when it couldn't reach the daily 10 SMA, I gave up and closed the trade for a piddling 40 pips. I then went short and lost the 40 pips. At least I had the sense to stop and reverse at that point so I made the loss back but it's a great example of how even someone as stubborn as I am can lose my focus. The pair managed to climb as high as 1.0031 yesterday, giving some evidence to my hypothesis that the pair had formed an ending diagonal from which the move should be up. However, this game isn't over yet; there are some troubling signs in the pair with price targets extending down into the .9500 area. Ideally, the pair would close above parity for the week to provide a bullish outlook. The low this morning, so far, has been .9917. That's just about on the 50%retracement of the move up so let's see how it goes from here.

USDCHF never managed to get above last week's high of .9784, spending the week correcting from its move up from .9300. The pullback looks as though it might be ending and a bull flag on the daily chart targets 1.0388. It would be great if .9600 held as support (.382 of the most recent move up) and I may buy in again at that level. Below that is .9543/.9521 and then the .618 of .9485. Dropping below that would be bearish.

USDJPY managed a nice recovery from its drop to support of 81.86 on Wednesday and rose to a high of 83.13 yesterday. Since the early January low was 81.23, this makes for support in the 81.86/23 zone. There's a bull flag on the hourly that targets 84.06 but note that the high brought it to the short-term, resistance, downtrend line from early January.

EURUSD—signs of weakness

While the Euro did break above resistance as I blogged about yesterday, there are some signs of weakness popping up. It did not close yesterday above 1.3457. The break above could turn out to be a fake-out.

First thing to remember is that the pair is in a downtrend—only a break above the November high of 1.4282 would bring a little optimism into the picture.

Second thing is what I blogged about yesterday—Euro has all the chartacteristics of an Elliott Wave expanded flat wave c. Looking at the three-hour chart below, one could make a case that the fifth wave of circle c is completing. If so, the next move is down. Howver, it could also get significantly higher before it turns down so one must be cautious.

On the chart below, one also sees the RSI failure swings I mentioned yesterday. This, too, is bearish.

About the only thing that's positive is the bull flag on the three-hour chart which I've drawn in green on the chart below. That would be invalidated with a close below 1.3400. However, until it is, upside targets remain at 1.3842 with fib and polarity resistance at 1.3887.

A break below 1.3290 would be bearish with support at 1.3244, 1.3000, 1.2969, and 1.2850.

I'm short from 1.3480 but I've moved the stop to breakeven.

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.

AUDUSD—stalled

Aussie is at a significant point with its drop in the past hour to .9911. There was a recent hammer low of .9926 on the hourly chart so penetration below that is ominous if it continues and closes below there. The short term uptrend line from the 11 January .9804 low is at .9916—another point it shouldn't drop below in order for the bulls to remain confident (or actually to have any hope at all).

One can make a case for a bear flag on the three-hour chart with the break coming at .9916 for a price target of .9463. My only concern with the flag is that the length of it is longer than the flagpole (61 candles versus 52) which is not normally what happens—it's usually about 1/2 to 2/3 the length for the best results. RSI has broken below its short-term trend line. If price follows, that's bearish.

However, it's common in spot Forex for prices to dip below or above a point and then reverse (a fake-out). So this may be what's happening here. If it can break and close above its daily 20 SMA (currently 1.0013) there'd be more reason for optimism. As it is, I'm leaning short.

I'll post a chart later.

© 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.

USDCAD—stop and reverse

Finally, the pair managed to get above the 10 daily SMA yesterday. I did a stop and reverse at .9939 (-41 pips). This, by the way, gave back my profit on my previous USDCAD trade but there's potentially some valuable information here. First, the pair may be going into a choppy period where traders will get whipsawed. That wouldn't be surprising—there's much uncertainty out there. Second, it could be my earlier interpretations of bullishness this week were correct despite the ominous patterns I talked about yesterday. If it's the former then this trade, too, will be stopped (but at breakeven). I'm not closing out part of it at this point as chasing 40 pips here and 40 pips there is a waste of time. It will either run or it won't. If it's the latter, then basing took place at the lows and there's the possibility of a short squeeze coming up right above parity. Lots of possibilities and the market will sort them out sooner rather than later.

The pair has nudged above parity to 1.0006 so far this morning. I'd like to see a close today above parity.

© 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.

EURUSD—failure swing

One thing to watch in the Euro is the failure swing in RSI on the one- and three-hour charts. Welles Wilder in his book, New Concepts in Technical Trading Systems, wrote that failure swings are "significant after an RSI high in the area of 70 or low in the area of 30 (p.68). This is what has happened on both charts with the subsequent swing up not penetrating the prior swing up. It's bearish but of course with short-term charts it means in the short-term. However, combined with the overall downtrend in the longer multi-month time frame and with the fact it's at resistance, could mean the pair will finally start moving lower again. Let's see.

© 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.

EURUSD—broke above resistance

Euro broke above resistance at 1.3457 and 1.3500 with a high so far today of 1.3539. It needs to close above these levels to remain bullish. If it does, the price target is 1.3842/65. I arrived at those using the three-hour bull flag on the three-hour chart and calulating the potential wave C of the Elliott expanded flat that seems to be unfolding. I've drawn the bull flag on the three-hour chart below. I also noted where prices corresponded to the wave count I placed on the daily chart yesterday. There's also a fib and polarity at 1.3887. All this would create potential for a return to the 1.4283 November high. Bulls would rejoice as would the Eurozone finance ministers.

On the down side, it is wise to remember that Euro is in a downtrend in the larger picture and this is an overall corrective move. It's also resolving the positive divergence on the daily chart that I blogged about yesterday. The first support is at 1.3244. A close beneath there turns things bearish again and opens support at 1.3000, 1.2969, and 1.2850. After these levels, price would probably begin to accelerate downwards to 1.2500.

So what are my plans? Until I get some other signals I'm staying flat for the moment. I'll be looking for failure through such things as shorter-term divergences and patterns that may develop in the short term. If that doesn't happen, I'll buy on a retracement.

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 Hourly Chart

Here's the hourly chart I was talking about in my last post. The only thing I didn't mention was the negative divergenge.

EURJPY—rally

I'm out of the remainder of my long from 109.85 at 110.30 yesterday (+45 pips) when it looked as though the pair might fail at resistance. It hasn't gotten above 111.16 but this rise technically invalidated the daily evening star since that high was 110.99.

The C leg of the ABC targeted 111.09 (1.618A) so we're right in the vicinity of that and we're also at confluence.

Two things jump out at me on the hourly chart. First, the pair has been in a sideways consolidation since 8AM EST yesterday morning. It's a fairly narrow rectangle of 97 pips (111.16/110.19) and when prices hover in a narrow band such as this just above or below resistance it's often a bullish sign because demand (buying) is enough to prevent a retracement. If it does break upward, the target is 112.13.

The other thing that jumps out is the look of a triangle forming which in Eliott Wave speak would break upwards. In classical technical analysis the triangle is often a continuation move. The top of the triangle is 111.24 from which it could break upward to target 112.54. This is close to resistance consisting of price highs, fibs, and the 200 MA at 112.43. Beyond that, within the upward sloping channel, there are targets of 113.04 and 113.78.

On the downside the support remains at 109.85, 109.58, 1.0895 (prior resistance), 108.50 and 108.00. Below that is a zone of support from 107.86 down to 106.83, then 106.24 and 105.83.

I'll post a chart later.

© 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.

USDCAD—can't reach daily 10 SMA

.9984 was yesterday's high which rebuffed it again this morning. I closed the remainder of my .9860 trade for +40 pips. In an over-excited market for the Euro, it's not likely this pair can get far. I shorted at .9898.

I won't bet the bank on it falling too far but there are some ominous patterns. First, an ABC on the hourly yesterday, targeted .9966 if C equaled A (.9745 if it was 1.618A). Since it faltered at .9935, it looks as though this short-term may be over.

Second, if one looks back on the daily chart, there is a triangle that began 4/21/2009 and which the pair penetrated below this past October. It retested the lower boundary for some time and then seems to have begun declining in earnest down to this week's low of .9838. The price target from this triangle is a .9549. I never look at just one thing but when I was running some fibs late yesterday, I discovered that .9561 is the .618 retracement of .9058 (2007) to 1.0374. The two prices are very close together. The downtrend line I began drawing 12/21/10 comes in around this level as well if I extend it. I also have targets from Point & Figure charts that are lower than this although I think they're somewhat unrealistic.

What about the wedge pattern I wrote about yesterday? It's there. Wedges can occur during long downtrends. As I wrote yesterday, in a declining wedge, prices generally break upwards because the steep angle is difficult to maintain.

If one considers it as an Elliott ending diagonal then as price action narrows in the fifth wave, it breaks upwards. I've marked waves one through four which I believe ended with yesterday's high. Now this five of five should break down no further than .9805 or so. Price would then break up and out. There's a rule for ending diagonals that says wave four always ends in the territory of wave one. If it ended with yesterday's high it has not done so. Prechter and Frost's book on Elliott Wave Principle note one exception to this so I'm not sure how they can call it a rule but there you go. Otherwise this qualifies if you consider it occurring in the fifth wave down from the 1.3065 high in March 2009. OK, if that's what it is then prices will break upwards fairly soon, the pair will overtake its daily 10 SMA (currently .9907) and there will be a nice rise in prices. One has to see the break happen first, with a close above .9947. Same is true if we drop the Elliott blah-blah and just treat it as a wedge. If it does break upwards, there's a zone of resistance in this area up to parity, consisting of moving averages, price highs and lows, and fib confluence.

There's also a slight positive divergence on the daily chart although divergence is everywhere it seems and this one has been going on since last March.

Bottom line, I'm short with a tolerable stop (not too much risk even if it breaks upward). We will have to see.

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.

USDCAD—little bounce

In typical knee jerk reaction, the USDCAD bounced from its overnight lows of .9838 based on the non-news of Bank of Canada not raising its interest rate. .9911 has been its high so far. This past Friday's high was .9913.

I bought at .9860 earlier this morning. My thinking was that the pair had been pushed down to ridiculous lows and that there was small risk because the Jan. 2008 low of .9841 and the May 2008 low of .9820 would presumably serve as some kind of support. I also have a little calculation I do when I can't easily see support that had given me a low of .9850. I am not necessarily in the trade for the long-term. Let's face it—the actions that pass for economic policy in the USA, along with a general greenback aversion, have seriously weakened the USD. I took some quick profits but I'm leaving some of the trade on as there's a slim chance the pair could rally to at least parity or better.

Why do I say that? On the daily chart, the pair formed a wedge pattern (or maybe an ending diagonal in Elliott Wave speak). In a declining wedge, prices generally break upwards because the steep angle is difficult to maintain. Things don't usually go straight up or straight down. I don't use any pattern as a signal by itself but the signal would come from a wedge with a close outside the trend line. In this case, one would want to see a close above .9947. Obviously, I did not do that. Breakouts are tricky in Forex. There's a zone of resistance in this area up to parity, consisting of moving averages, price highs and lows, and fib confluence. There's also a slight positive divergence on the daily chart although divergence is everywhere it seems. Therefore, we will have to see.

I don't try to call bottoms or tops but sometimes with what seems like a key low or high, I will take a trade if I have other reasons for doing so, i.e. patterns, divergence, etc. These are higher risk trades by definition since one can't usually call a top or bottom. Even if all the reasoning is right for a reversal, the market can outlast the trader, slowing bleeding them to death with a series of probes lower or higher. This is why if I take these types of trades I usually have a very tight stop. I sometimes set the stop beyond my "real" stop so as to not get taken out in stop hunting but if I do that then I babysit the trade. This is not something I like to do. Babysitting tends to make the trader more anxious than they need be. In addition, you can't just pick a stop willy-nilly because an unexpected event could cause it to be hit. Thus, even when trying to keep a stop from stop hunters, one must consider the risk and not choose a level that would result in too great a loss. The best policy (and one I follow 99.98% of the time) is to set the real stop with the trade. If your analysis is good, the market will usually respect it.

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.

GBPUSD—another surge

I'm still long from 1.5419.

On the strong fundamental news, the pair surged through 1.60 this morning, only to be turned back by 1.6059. With that high Cable gained 249 pips since Friday's close which is 60% of the 414 pips it gained last week. And it's only Tuesday morning. A pullback should happen at some point and I will probably add to my long position. Negative divergence persists on the three-hour chart. However, it's possible for the pair to get to 163.00/40 before that happens.

A .382 of the current move would be 1.5780, very close to other support and a buy would be in order here.

If the pair peaks with the 1.6059 and begins to drop, it makes the head and shoulder pattern more likely which I wrote about yesterday. There's a bearish engulfing candle from November's monthly chart with the high of 1.6302. If the pair definitively closes above that, the candle is invalidated.

Support is at 1.5912, 1.5810. 1.5780, 1.5740/10 (prior resistance and uptrend line from last week's move), and 1.5686/51 (fibo of most recent move up, daily 10 SMA, and strong prior resistance). Below that is a strong range from 1.5567 to 1.5506 made up of fib confluence, moving averages, and price.

Resistance is at 1.6100, 1.6228, 1.6302 (the November high which was also the top of a monthly bearish engulfing candle), 1.6300 and 1.6348.

© 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—rallying to resistance

Instead of waiting for the rally, I decided to go long yesterday at 109.85 when it looked as though the 109.58, hammer low would hold. It was accompanied by an RSI failure swing on the hourly chart.

Now, though, it has rallied to resistance and I took much of the trade off the table for +80 pips. I've been interested in shorting this pair since last week. On the daily chart, Friday was a hanging man candle (spike high of 110.99) and yesterday was a bearish engulfing candle for an evening star formation. This suggests a drop is at hand. If the pair closes above 110.99, the evening star will be invalidated.

I've been analyzing this as an ABC correction with the C leg targeting 111.09 or 1.618 of the A leg. 110.99 was pretty close. Its high so far this morning is 110.78 and the last closed, hourly candle had an upper shadow. This hints the higher prices are being rejected. The angle of ascent is also very steep. I'm almost ready to reverse and go short. If I'm wrong, my stop can be tight and it won't eat up all the profits of the long trade I'm in.

Support is at 109.85, 109.58, 1.0895 (prior resistance), 108.50 and 108.00. Below that is a zone of support from 107.86 down to 106.83, then 106.24 and 105.83. If the pair manages a close above 111.24/33, there's resistance at 111.68/97, 112.52 from the 200 daily SMA and 112.20/44.

Here's the hourly 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.

EURUSD—at strong resistance

It's true that good bond auctions and Trichet's silver tongue last week gave Euro a good boost up but one has to ask the fundamental question—what has really changed? Has the Eurozone economy suddenly become stable and growing? Some would argue they're practicing austerity and we're printing dollars so the pair should rise. This is a less than compelling argument. There is still great uncertainty. OK, enough with the fundamentals.

Euro's bounce brought it to a high so far this morning of 13429. This is near strong resistance. The 100 SMA is at 1.3426 and 1.3454 was the Jan. 14 high. 1.3500 is of course the big psychological and people holding longs will want to take profits. I'm planning to sell at some point. What I'd like to see is momentum failure. Using RSI, that might be a failure swing.

Looking at the daily chart puts this bounce into some perspective. One thing that looks positive on the chart is that the pair dipped below the daily uptrend line, rallied and closed back above. This suggests a fake out. It retested the line with yesterday's low of 1.3244. This was bullish. The current daily candle looks strong. Note that there was positive divergence on the daily chart and this rally is resolving that.

One can also see the resistance on the daily chart with fibs and prior highs. From an Elliott Wave perspective, the pair could be in a flat correction that began with the November low of 1.2969. I've labeled it on the chart below. Price behavior is also taking place within a downward sloping channel, highlighted in yellow on the chart below. The low of this channel is around 1.2850, near the prior low. Its boundaries are the 1.3498 December high and the 1.2874 January low. If Euro broke below then the price target is 1.2296. You'd see some smiling bears then. On the three-hour chart (not shown) there's a bull flag which targets 1.3497—near the current level so this adds to the resistance even though this is a minimum price target.

Resistance is at the current level and then 1.3500/11, 1.3630/45 (price and fib), and 1.3786 (11/22/10 high). Support is at 1.3380, 1.3294, 1.3244 and then a zone down to 1.3100. Below that is 1.3000, 1.2969 and 1.2874. If that broke, then the plunge would probably begin in earnest. Lots of room between here and there, though, and there would be rallies and reactions galore.

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.

Weekly—Highs and lows

Here are the highs, lows, and closes for last week:















© 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—dropping

I missed the short in this pair as it happened late Friday and I didn't analyze the pair over the weekend where I might have gotten in earlier today. This happens—some trades get away. However, it may retest the high.

When I wrote last week about this being the C leg of an ABC correction, I wrote that the potential for 1.618 of the A leg was 111.09. The pair reached 110.99 before falling. On the hourly chart, there's a low this morning of 109.58. This was a hammer candle and support should hold. A close below targets 1.0895 (prior resistance) and then 108.50 and 108.00. Below that is a zone of support from 107.86 down to 106.83, then 106.24 and 105.83.

Resistance is 110.00, 110.99, and 111.68/97 (strong).

I'll watch for a rally in this pair.

© 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.

US holiday

Today is Martin Luther King day so the market action is likely to be lighter than usual and there may be price swings because of illiquidity later in the morning as London wraps up.

GBPUSD--resistance

Last week was a great week for Cable longs. The pair moved from a low of 1.5475 to 1.5889 in above average volatility. It overcame strong resistance at 1.5651.

As of Thursday evening I was holding three long positions from 1.5419, 1.5602, and 1.5750 respectively. I closed out the latter two on Friday afternoon for 1.5865 and 1.5827 for a total of +340 pips. Even though I wrote on Thursday that there was little in the way of the pair moving to 1.5912, the weekly high on Friday of 1.5889 was very close and I wanted to book profits. I still have my long from 1.5419 and may close it as well. I can always come back in on a retracement.

This morning the pair has touched a high of 1.5915 in the last hour. There is negative divergence on the three hour chart. After its strong rise last week, a pullback would help the pair get more energy (if there's any to be gotten) and then it could try again for 1.6000, a big psychological number. 1.60 would also be an interesting peak from a weekly point of view in that there's a potential head and shoulders pattern with the head at 1.6302 (the top of the bearish engulfing candle from November) and the neck at 1.5295 (September low).

Resistance is at I have a price target of 1.6100 coming from a three-hour point and figure chart. The downtrend line on the weekly chart is coming in at 1.6228. So resistance is 1.5912 (prior high), 1.5960, 1.6000, 1.6100, 1.6228 (weekly downtrend line), and 1.6300 (the November high which was also the top of a monthly bearish engulfing candle.)

Support is at 1.5810. 1.5740/10 (prior resistance and uptrend line from last week's move), 1.5686/51 (fibo of most recent move up, daily 10 SMA, and strong prior resistance). Below that is a strong range from 1.5567 to 1.5506 made up of fib confluence, moving averages, and price.

So the potential is there for strong moves in either direction. Watch for signs of faltering as it moves towards the mid-1.59 range to 1.60 for the possibility of shorting.

Here's the three-hour chart. Note the overbought state of RSI and the negative divergence.












© 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.

Currency market today

In a recap of the week so far as of 9:10 AM EST:

AUDUSD took a tumble this week, reaching a low of .9804, a lower low than the prior week. It did stay above the weekly 20 EMA which has been holding price dips since September. The rally was capped yesterday at 1.0020. This morning saw another drop, dipping below the daily uptrend line once more. The listless RSI readings that accompanied the rally may have something to do with the decline. Low so far this morning is .9857 from where it's trying to base. The drop took out the remainder of my long for +38 pips. Resistance is at .9900, .9982, 1.0020/56, 1.0183, 1.0214, and 1.0257. Support is at .9804, .9690, .9612 and .9544/32.

EURGBP had a low this week of .8285, only a pip or two below that of the prior week. Currently, the weekly candle looks like it's a piercing candle which would be bullish if it closes near its spike high today of .8499. Resistance above .8500 is strong.

EURJPY bounced from a low of 107.80 on 106.83 on Monday to its high so far this morning of 110.93. That exceeded last week's high. A weekly close there would be bullish. Despite that, though, there's still much weakness in this pair. Assuming the pair is in an ABC correction, a C wave that's 1.618 of the A wave would take price to 111.08. If it can close safely above that, it's possible it could see 114.24/52 up to 115.69 but I think that's unlikely.

EURUSD bounced smartly as well from its low of 1.2874. Fierce resistance is in the 1.3500 area. If the pair manages a clean close above 1.35 then 1.3739/85 is possible. That would make the Euro bulls, who have largely been in retreat, very happy. It's more likely there will be another pullback, slightly below the 1.2874. I kook forward to my weekend analysis on this pair.

GBPJPY dropped to a low of 128.32 this week. And then, in line with the emotional market, marched up to a 131.60 resistance this morning. Should the Guppy clear that, then 133.03 will be formidable. I plan to short.

GBPUSD , from a low of 1.5475, bounced to yesterday's high of 1.5884. It's trying to get back there this morning and the high has been just a few pips below at 1.5876. The price target, if it doesn't falter, is 1.5949.

USDCAD has been struggling all week, not catching much of a ride from the earlier USD strength and dropping to a low of .9849. It tried to pick up some steam this mornng, reaching .9977 but is stumbling again. Next week should be interesting for this pair as there has been low volatility all week.

USDCHF climbed barely above last week's high to .9784 before falling to a low of .9605 this morning. This lined up with yesterday's analysis which put a C wave at 1.618 that of A at .9568 and price support at .9605 and .9587. Additional support is at .9525. It's trying to rally.

USDJPY touched a low of 82.41 this morning, after falling back from resistance at 83.46 on Wednesday. A close below 82.50 this weak will leave the bears in control.

Lots of emotion

The market is showing very emotional moves this morning. Either you believe something has fundamentally changed such that currencies such as the Euro are now strong or else you have to believe this is something of a kneejerk reaction. We'll know soon enough.

USDCHF—retreating

The dip down to .9617 was below the short-term uptrend line but RSI has not yet broken below its uptrend line. I closed my long from .9490 at .9679 (+189 pips). I have one long left from .9338.

As I pointed out in my post on the Cable, the Swissy and Cable look as though they're finally diverging again (they don't usually move in correlation as they have been in the short-term lately).

The Swissy was battling fierce resistance in a zone to .9860. Tuesday's chart showed five waves, so this is likely a correction. The fifth wave at a high of .9784 was just beyond the projected .9760.

If this is an ABC correction, then A's length was 121 pips (.9783 to .9662 yesterday) and B ended at .9764. This implies a zigzag correction with C now projected at 1.618 that of A for .9568. That lines up with price support at .9605 and .9587. Let's see how it behaves there. When pairs rise quickly as this one did, there's not a lot of support built up so if it drops below .9587, there's minor support at .9525 but then there's not a lot to prevent it falling back to the gloomy .9300 lows.
© 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.

AUDUSD—good move up

Aussie reached a high of 1.0020 this morning. I'm still long from .9859.

It's near resistance here at 1.0030/56 but it isn't showing weakness just yet. In its ebullient way, it just may be resuming its uptrend. Next resistance is at 1.0183, 1.0214, and 1.0257. Support is at .9936/13, .9821, .9690, .9612 and .9544/32.

© 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.