EURUSD—going nowhere for now

Euro has been in a small range this week from a low of 1.4027 to 1.4149. I'm still short, thinking there will be a break to the downside. This is because of the ABC corrective look of the daily price action as well as the longer downtrend, in effect since July 2008. My stop is at breakeven.

On the hourly chart, the hour just closed (10 AM EST) is a hammer. Since it's near the range support, there may be another bounce but the immediate resistance is 1.4149, followed by the prior high of 1.4248 from last week and the key 1.4283 November 2010 high.

Here's the daily chart:

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author. My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

AUDUSD—new high

AUDUSD made a new high this morning, 1.0362. It has achieved several price targets with this high; there are still targets up into the 1.06 area. On the way there, however, there will be some key resistance. 1.0400 is psychological. On the weekly chart, there is resistance at 1.0500.

On the three-hour chart, price has pulled back to the uptrend line. I added a fourth small position. If it falls below the uptrend line, look for support at 1.0314 and 1.0205.

© 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.

EURJPY—soaring

EURJPY has reached a high of 117.27 so far this morning, breaking above a pennant. I have some very attractive price targets for this pair, beginning at 119 and going up to 126 from various methods.

However, be cautious. First, the yen loves bad news—more bad news from Japan's nuclear cleanup efforts could send this pair plummeting. Second, there has been much choppiness over the past two days. This means the market is nervous even though there seems to be better risk appetite this morning.

Note on the daily chart below that the pair hasn't been above 117 since May 2010. This price is parity. It's also at the top of the multi-month rectangle. It would be logical to expect some reaction here and if one wants to go long, waiting for a pullback would be smarter than jumping in at the high.

Resistance is 117.27, 117.60, and 118.27.

Support is at 116.00, 115.54 and 114.57.

Here's the daily chart:

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author. My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

Euro—daily

On the Euro's daily chart, you can see price action opposite that I described it below for the USD. This makes sense. However, as I wrote yesterday, I expected price to hold under 1.4131. This morning it reached 1.4149. Although, it has since dropped, this suggests to me a more complex correction may be unfolding.

I'm still short but I wouldn't hesitate to stop and reverse if price action indicates that's the way to go.

There's resistance at 1.4194, 1.4248, and the key level of 1.4283. Above that November high, suggests gains to 1.4345 and possibly well beyond that. Immediate support is at 1.4021.

Here's the daily chart:
© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author. My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

USD Index—daily ending diagonal

On the daily chart, one can interpret recent price action as an ending diagonal. I've marked it in red on the chart below. Prechter, in his book, Elliott Wave Principal, defines several rules for ending diagonals. In EW theory, rules cannot be broken.

The first rule is that an ending diagonal (ED) always subdivides into five waves. The second rule is that it must always occur in wave five of an impulse wave or wave C of a corrective zigzag or flat. Rule three states that each wave of the ED must divide into zigzags.

There are four rules concerning price action, i.e. wave two cannot exceed wave one, wave three always goes beyond wave one and wave four never exceeds wave two. In addition, this is the only time wave four can enter into wave one's price.

The pattern traced out on the daily chart meets all of these rules. including wave four penetrating wave one's price.

There are also several guidelines. For example, waves two and four usually retrace between 66 and 81% of the prior wave's price action. That doesn't happen here (in both cases it's less than 50%) but guidelines are just that—they don't have to be in place. Nonetheless, a reaction that can't reach more than 38% or so of the prior wave usually indicates a very strong trend down so an ED can fail. Nobody, unfortunately, has ever produced a valid study showing the validity of EW theory, let alone the performance of something such as the ED. The thing is, though, that if this ED does fail, i.e. price drops below the 75.24 low, that's a powerful signal.

If it is a successful ED pattern, then price action out of it is usually fast and powerful. This would be to the upside. There's other evidence for a violent move if price increases. There's significant sentiment against the USD. It's difficult to believe there are many people left to sell. The people jumping in now are typically weak players. Any rise in price would cause significant short covering. This would fuel an additional rise. This type of behavior leads to fast moves.

Note also the positive divergence on the daily chart. Whatever you think of the USD potential, this isn't the time to be going short.

There are other ways to interpret this chart than EW theory. As I wrote last week about the weekly chart, any move below the prior swing low of 74.16 confirms the downtrend with a lower low (and lower high). The failure of this ED from an Elliott perspective would hint at that possibility. Failed patterns are powerful signals. One can also see the possibility for a rectangle signaling range trading on this chart. I've marked it in blue. However, the next move would be up in that case to about 81.10. Coincident or not, that target is near the price projection of 81.35 from the ED (the origin of the pattern).

Here's the daily chart:

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author. My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

EURUSD—weekly

On the weekly chart, Euro may be making another run for the long-term downward trend line at 1.4279. This downtrend line begins at the 1.6041 high with a second touch at 1.5144. Note, though, that the upper boundary of the rectangle is near 1.50, a nice round number. Of course, Euro reaching 1.50 would find Euro bulls dancing in the streets but it would not invalidate the longer-term downtrend nor the weekly Elliott Wave count. I'm interpreting the count as the move down to 1.1876 being wave 1 of (3) so the current uptrend is wave 2 of (3). That's one interpretation. There are others.

Reaching 1.50 would result in a double zigzag correction—well at least it would if there was then a sustained move down. For now, though, immediate weekly resistance is at 1.4279, near the prior Nov. 2010 high at 1.4283.

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.

EURUSD—rally

Euro is rallying from 1.4021. That price was slightly below the 1.4041 support and only five pips below the price at which wave C would equal A in a three-wave correction off the 1.4248 high from last Tuesday. The rally followed positive divergence on the three-hour chart.

If this rally is simply a correction of the 1.4021 low, the potential for wave C is 1.4131 where wave C would be 1.618 of wave A (wave A started at 1.4021 and ended at 1.4085; wave B ended at 1.4027). 1.4131 is also where a very short-term trend line comes in from the 1.4220 high.

A move above 1.4131, then, hints that the daily uptrend is resuming. RSI on the short-term chart gives a hint of momentum and this is something I'll watch as another piece of evidence for strength or weakness. Since I'm already short from 1.4190 with a stop at above 1.4153, I'll most likely add to my position if, and only if, I get some confirmation from RSI or from a bearish candle. Otherwise, a stop and reverse may be the way to go, especially if the Euro breaks above 1.42.

Resistance is at 1.4131, 1.4194, 1.4248, 1.4283 and 1.4345.

A break below 1.4021 would find support at 1.4000/3981, 1.3856 and 1.3752.

Here's the 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—broke above 1.03

Aussie finally made it above 1.03 to 1.0314 as of earlier this morning.

At the beginning of January, I wrote that, "1.0307 is the top upward line drawn on the weekly chart below. There was an inverted head and shoulder pattern on the daily chart (not shown) that I blogged about in November. Its target is 1.0371".

It would be logical to see some correction as this is at or nearing strong resistance. In addition to being near price targets, 1.0333 was the 7/82 high. Calculating the weekly pivot point finds RS at 1.0369. Therefore, while there may be additional moves up to the 1.0370, a correction may kick in at any point. A correction could cause price to drop to 1.0080/65 (near the .382 retracement of the move up from .9706) or parity. Only if the pair drops below .9706, do possibilities that are more bearish come back into play. It's worth noting on the weekly chart below that there is still negative divergence with RSI.

The next potential target is 1.05 near the upper boundary drawn on the weekly chart below (the same line that targeted 1.0307) and a price target zone from various calculations.

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.

Inside Weeks

A few of the pairs I watch had inside weeks with Friday's close. These were USDCAD, USDCHF, USDJPY and, by one pip on the topside, EURJPY.

Inside candles, regardless of time period, are those candles with a price range that is within the prior candle's range. They represent a congestion or consolidation period and are more meaningful when they aren't part of a larger pattern, i.e. a triangle. The reason they're less significant in a larger pattern is that they're still reflecting the lack of significant movement in that larger pattern. Various trading strategies use inside bars. I don't consider them a signal in and of themselves but they're something to be aware of, particularly regarding their high and low as potential resistance and support respectively. Obviously, it's more meaningful if these correlate with other support and resistance. For example, with EURJPY, the high is near general price resistance.

© 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.

Weekly High, Low and Close

No posts today

See you Monday.

GBPUSD—broke candle low

The low so far is 1.6092 after a rally to slightly less than the .382 retracement of the move down from yesterday. The last completed hourly candle closed below the hammer low of 1.6136. This is bearish. If the pair retests the candle low of 1.6136 I may add to my short position.

© 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—Hourly divergence

On the hourly chart (not shown), there is positive divergence between price and RSI. In addition, the last closed hourly candle was a hammer. Both of those hint at a rally. Resistance is at 1.6197, 1.6235 (.382 retracement of the move down from yesterday), and 1.6267 (price high and 50% retracement). The hammer low was 1.6136. If Cable closes below that, it invalidates the hammer. At that point, I'd look for 1.6000.

© 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—weekly

Cable has fallen sharply to a low of 1.6136 this morning in the failure off the 1.6401 top yesterday. Looking at the move in the context of the weekly chart, one can see a symmetrical triangle with what looks like a corrective move off the 2009 low of 1.3503. There has been a series of three wave moves so far. While it has been tantalizing watching price nibble at the upper boundary, the probability is for a move back towards the triangle low at 1.4725.

Obviously, if it rallied and managed to take out the 1.6401, it would be significant. There still is a daily flag target of 1.7215. This is a valid target if one is bullish.

However, I'll confine this post to the downward potential. Three wave moves within a triangle from an Elliott perspective often relate by a Fibonacci number. These are close, but not spot on. The move from 1.7049 to 1.4229 was 80% of the move from the 1.3503 low. The move from 1.4229 to 1.6401 was 77% of the prior move.

Instead of discussing a triangle, one could also just assume an ABC correction where the C leg at 1.6420 was .618 of the A leg. This is close to where it failed yesterday.

On the way to 1.4725 Cable would find strong support at 1.6000. On the three-hour chart, this is the lower boundary of the channel I previously posted and 1.5982 was the last swing low on that chart. There, one could look at a long position but watch momentum and price behavior carefully.

I'm short this pair so I'll blog about it.

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.

USD Index—Yucky

I've been blogging relative to the weekly and monthly charts that "Until the index drops below 75.62, the dollar is in a position to rise".

Any asset class down to zero is in a position to rise. However, the index has penetrated that price support which definitely increases the yuck factor for the USD. I'm not sure who could still be selling because of the overwhelming sentiment against the buck but there's definitely an absence of buyers. If, for some reason, the price did move up, you'd probably see a great rush of short covering. In other words, the move would be violent.

The next support is the swing low of 74.16.

At this point, the index might have completed a C wave of a large ABC correction. I've marked it on the weekly chart below. There's also positive divergence with RSI on the weekly chart. That's pretty much it, though, for positive thinking Elliott Wave projections. One could also create a wave count that has this dropping below 70.90 but I don't think it's going to do that.

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.

EURUSD—correction

After reaching 1.4248 yesterday morning, Euro corrected sharply. I wrote yesterday that the potential for the wave C was 1.4179 and 1.4141. Obviously, it slid through the 79 and its low so far this morning is 1.4143. This is also price support down to 1.4138 so let's see if it can rally.

I wrote yesterday that the correction low of 1.4179/41 might be a good entry point for a long position. How do I decide if it is? One tool is RSI. For example, on the hourly chart, there is slight positive divergence beginning and this could be the sign that the correction is ending. Another hint from RSI would be RSI staying above 44 on the three-hour chart. These are both things that I've illustrated in the past. Price bouncing from here would be a clue, of course. Look for a bullish candle on the shorter-term charts, first. If it fails to bounce, look for support at 1.4100, 1.4041 and 1.4000.

Should it rally, immediate resistance is at 1.4154 and 1.4215. After that it has to take on 1.4248/83 again. Beyond that is 1.4345, 1.4400 and 1.4447.

No charts this morning—I'm having some time crunch problems.

© 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—failed at resistance

Cable failed yesterday at the 1.6400 resistance, a nice round number and just below the inverted head and shoulder (H&S) pattern with the price target of 1.6421 and the top of the channel at 1.6433. The remainder of my position was profit stopped out at 1.6297.

The low so far this morning is 1.6274, near the .382 retracement of the 1.6061/1.6400 move at 1.6269. There's a little room after that for the correction to continue. On the three-hour chart the RSI has broken its uptrend line but price has yet to follow. This uptrend line is at 1.6253. The .382 retracement of the 1.5985/1.6400 move is at 1.6241. Below this, the next support is at 1.6200/6196. Much below that would suggest to me that Cable is headed back to 1.6000. That would bring it back to the bottom of the channel on the three-hour chart I posted yesterday and potentially be a good entry point for a long position.

Should it rally, it has to overcome 1.6400. Potential price targets are then 1.6500, 1.6556, 1.6600 and 1.6638.

© 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—approaching resistance

On Saturday, I prepared the three-hour chart below to assist my analysis and potentially guide my trading for the week. My long had been taken out and I wanted to know if it was worth getting back in. One of the things the chart showed was an inverted head and shoulder (H&S) pattern with a potential price target of 1.6421. This, along with other analysis, gave me the reasons I needed to enter at 1.6276 yesterday. Cable moved up. This morning the high of 1.6400, allowing me to take partial profits.

Now, it's approaching resistance. The top of the channel is 1.6433. The profit target from the H&S was 1.6421. The current price is also parity. In addition, it's possible the pair is in a corrective move on longer-term charts (weekly and monthly) with targets up to 1.6465. If one isn't long, this isn't the time to jump in. Wait for a pullback. If the pair should scale this strong resistance, then potential price targets are 1.6500, 1.6556, 1.6600 and 1.6638.

Every individual trader should be doing some analysis on the weekend when the market is closed and there are no distractions. I prepared three or four different charts for Cable. Here's the one that indicates the H&S pattern:










© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

EURUSD—slowly moving on up

Euro touched 1.4248 this morning, struggling to keep its rally alive from its Friday close of 1.4182. I'm long from last Friday at 1.4155.

On the hourly chart, it could have just completed an ABC correction for wave four. It came within six pips of C being .618 of A at 1.4208, assuming A began at 1.4198 and ended at 1.4137 and B ended at 1.4240. If so, it's beginning wave five. A potential price target for wave five is 1.4374 so there's still a little room to run. The target could be greater (1.4759) but that's rather ambitious. If C of four is not complete, potential downside price targets for the correction are 1.4179 and 1.4141. Both of these price tie in with some other support. If it gets there, I'll probably add to my position.

Strong resistance is just above at 1.4275/83 and negative divergence exists on the hourly chart. I'd expect a reaction there but it's not clear this little run upwards is over. After 1.4283, resistance is at 1.4345, 1.4400 and 1.4447.

Support is at 1.4204, 1.4189/65, 1.4147, 1.4041 and 1.4000.

Here's the hourly chart:











© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

GBPJPY—weekly

Last week was the fourth week with lower highs. Obviously, last week's price action created a doji candle with a long lower shadow. The shadow's low of 122.71 dipped well under the weekly downtrend line that the pair broke above nine weeks ago but the close at 130.83 was above that line. The short-term view is that perhaps the long, secular downtrend has resumed. However, note that the pair didn't spend any time at the 122.71 low and bounced sharply. In additon, momentum, as represented by RSI, looks good.

Price action, this morning, is choppy. Immediate resistance is at 132.50. A close today below 130.83 would be bearish.

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.

AUDUSD—monthly

The monthly chart still shows a strong uptrend for this pair. However, the key number for the pair to overtake is 1.0257.











© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

EURUSD—pushed above Friday's high

Euro just reached 1.4203, above Friday's high and above the 1.4165/75 resistance. Furthermore, Friday's close was the highest since January 2010—over 14 months ago. This fuels the Euro bulls. Let's see if they can keep it going today. 1.4287 is the next resistance and it's very strong. First support is at 1.4165, then 1.4147, 1.4044 and 1.4000.

© 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—good rally

The pair closed the week Friday below parity at .9959. Note that last week's low of .9706 confirmed the double top with a potential price target of .9401. However, the rally has been strong—the pair touched 1.0070 this morning, well above the .618 from the move down from 1.0158. I went long last week at .9940 with a price target of 1.0053. Obviously, I took some profits at that point. Before reversing and going short, however, I need to see multiple bearish signals on the shorter-term charts.

On the hourly chart, the pair looks as though it's completing a third wave up so expect a reaction, possibly only to 1.0054 or .9987. Below that is support at .9959, then .9872 and .9781.

Here's the hourly chart:












© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

Week Ending Numbers

These are the high, low and close numbers for the past week:

AUDUSD—resistance

AUDUSD is up against key resistance at .9948 up to .9963 (the highs Wednesday and Thursday this week). A close above here for the week would be slightly bullish but better would be a weekly close above parity. The pair has closed below parity for the past six days after a long run of closes above parity.

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

EURUSD—struggling with resistance

Euro is struggling just below 1.4145. As I noted earlier, there is some good resistance at 1.4165/75 and this is playing out. However, the pair has formed a small ascending triangle (flat top, ascending lower boundary) on the 15-minute chart. It may break through. If it breaks below 1.4109, that may be a hint it can't pull off the move up at this time.

Here's the 15-minute chart:












© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

EURUSD—weekly

Euro appears to be on track for 1.4295. Here it will find resistance from the long-term downtrend line coming in from 1.641 and 1.5144. However, immediate resistance is at 1.4165/75 and it may fall from there.

Support is at 1.4016, 1.3856, 1.3752 and 1.3526.

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.

EURJPY—still within trading range

Even with the drop to 106.64 yesterday, EURJPY is still within the broad trading range that began last July. Once it touched the low, it immediately pulled back to 110.84 and has since been lingering in a smaller trading range between there and 109.47.

The pair is maintaining the break above the long-term trend line. Momentum, as represented by RSI, looks good. Both of these are positive signs.

Support is at 109.47, 109.27 and 106.64 (big gap there). Given that it bounced so sharply off that low, it's not likely to go back there but it certainly is possible. Resistance is 110.84, 111.97, 112.50, and 113.73. Above that, the pair will probably retest the 116 resistance.

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.

USDJPY—30-year chart

USDJPY fell quite a bit below the April 1995 low of 79.70 to a low of 76.59. It recovered to 79.74 overnight and is languishing in the 79 zone since then. There are many stories about the currency afoot—the central bank is intervening or its not; yen are being repatriated or not. I thought it worthwhile to take a longer-term look back at the chart. I have posted the 30-year monthly chart below.

On the chart, I marked the point of the Kobe earthquake in January 1995. This was a major disaster for Japan and one can see that the yen continued to strengthen in the months following the earthquake, bringing USDJPY from 101.45 down to 79.70. It's possible a similar story will play out this time even though there are differences between the two situations.

Another thing to note on the chart is the multi-year triangle. This suggested there would be a long downside move. That happened. The target of that triangle is 75.43 so it supports the idea that the yen could continue to strengthen although the vast majority of the move may over. Using some geometric techniques, I've long had another price target of 77.91 that of course has been exceeded.

One more thing on this chart is the positive divergence between price and RSI. One can't trade based only on divergence but it's an intriguing signal that there might be some upside in the offing.

Is the central bank intervening? The length of the most recently closed 3-hour candle suggests they are. I read that on Monday they sold yen, buying 186 billion dollars. However, as history shows, intervention doesn't always work to stop a slide determined to happen.

So what now? Taking the conservative road is not a bad idea—staying out of the market completely until the situation with the nuclear reactors stabilizes. Rumors are rampant and can cause large market moves quickly.

If one is going to trade, one needs to do so with tight stops. However, tight stops have a downside—in volatile and uncertain times, they can be taken out rather suddenly and then the market moves in the direction of the initial trade. Wide stops, though, are not the answer. Yesterday, for example, the GBPJPY moved from a high of 130.54 to 122.71 and the EURJPY moved from 113.31 to 106.64. You can offset the volatility somewhat by changing your position size downward. If you normally trade full lots, lower it to mini-lots; if you normally trade mini-lots, lower it to micro-lots.

I've been trading very little in the last few days—this type of market is better observed. When I do trade, I'm often in and out quickly. This style of trading doesn't lend itself to blogging so you've seen fewer blog posts from me.

I hope and pray that things will stabilize in Japan quickly. The Japanese people are resourceful and resilient. They may come out of this stronger than before it began.

Here's the 30-year 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.

USDJPY—at Nov. low

USDJPY touched 80.30 which is one pip below the Nov. 2010 low of 80.31. After this, there isn't another low unless one goes back to April, 1995 where the low was 79.70. It's not that far away in price.

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

EURUSD—resistance

The Euro is having a terrible time breaking above the 1.4036 resistance. Some people are talking about a potential double top but it won't be a double top until price breaks below 1.3752. The nice thing about it hanging about just below 1.40 (high yesterday was 1.4013) is that if one wants to short, one can have a very tight stop. The 1.4013 high led to an evening star formation on the three-hour chart. Beware, though, of pairs hanging around just below resistance. They often break through. If someone wants to go long, I'd wait for a pullback at this point.

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

GBPJPY—daily chart

The Guppy has moved down sharply from its February 18 high of 135.54. The low yesterday was 129.19.

Where might this drop end? The most likely area is 128.86/10. There are several reasons. First, 128.86 is confluence. Second, 1.2881 is a support from the weekly pivot. 1.2832 is the January low. Finally, if one assumes that an A wave began at 1.3554 and ended at 131.13, and the B wave ended at 135.24, then wave C will be 1.618 of A at 128.10. One thing to note is that a broken former trend line comes in below 128 so if the pair is going to retest it that moves support downwards.

If this support zone doesn't hold price, then the next support is at 125.51 so if one tries a long position in the 128 support zone, use a stop that matches your risk tolerance.

Will it go to 125.51 and possibly below? Who knows? There's some evidence it could. For example, on the daily chart below, the break upward, above the trend line, even though sustained for over six weeks, could be a false break. A close below 125.51 would confirm that. One could also argue that the move up to 135.54 was a three wave correction on the daily chart.

Watch behavior, both momentum and price, in the 128 zone if price reaches that level, for clues as to future behavior.

Here's the daily chart.












© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

USD Index—holding support

When I was analyzing the monthly chart earlier this month, I stated, "Until the index drops below 75.62, "the dollar is in a position to rise. It has not dropped below that price. This is despite the overwhelming sentiment against the dollar. For example, if you look at the Commitment of Traders (COT) report, you can see the extreme short position in the dollar. Yet the dollar is holding its uptrend line on the charts, drawn from the 2008 low. That line has had two touches prior to last week's third touch, so it is a valid trend line. Interestingly, the last two lows (74.16 in Nov. '09 and 77.42 in Nov. '10) didn't make it down to the line.

This isn't to say the buck won't penetrate and close below that line. Last week, the low of 76.11 was perilously close. However, extreme sentiment against an asset class when that asset is at support lows is often the formula for a rise. The point here is that the trader must be careful. If she or he holds the opinion that the dollar is going down, this isn't exactly the place to jump in since it's holding support. That trader should already be short with profits locked in place. Going short now requires a close below the trend line and even then, one would want a tight stop. The profit potential is limited since the 75.62 prior swing low is just below. Why would anyone even be considering going short now? Talk about being late to the party. If everyone is already short (as the COT report shows), then who is left to sell? If you want to go short, read my blog on March 2 when I discussed the monthly chart and wait for a rally.

The trader who wants to go long is in a stronger position since the index is at support. However, the trader must actively manage the trade. Nonetheless, my bias is long at this point because the chart supports that position technically. If one went long and the pair closes beneath the trend line, it would be a warning. If price moves below 74.16 that would be the confirmation point for a double top and the hint for new, heart stopping lows.

Here's the weekly chart. It looks as though there was a data error for this week with the spike up so ignore the long upper shadow.










© 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—Monday close below parity

Aussie had its first close below parity in 19 days, finishing Monday at .9947. With all the bad news coming from Japan, prices this morning have dropped to a low of .9861. Fear of radioactivity spreading throughout the Pacific Rim may drive price lower. I'm going to assume that this is not as bad as the situation was at Chernobyl in 1986 and try to focus on technical levels.

AUDUSD was showing signs of weakness before this news event happened. As I've written before, this could be the C leg of a correction on the weekly chart (1.0183 to .9804 being wave A; the move up to 1.0257 being wave B). If this is true, one could see corrections down to .9858 (C=.618A), .9611 (C=A), or .9211 (C=1.618A).

In a situation such as this, I look for confirmation of any given price projection from other methods. In this case, Aussie has a layer of support from .9988 down 179 pips to the prior swing low of .9804. It consists of monthly and weekly pivot support levels, fib retracements (the .382, .5, and .618 of the .9537 to 1.0257 move), the daily 100 SMA, and the weekly 20 EMA. From this, it's reasonable to expect that the C leg might limit itself to approximately .618 of the A leg, a point of view that would be consistent with a reaction after a good climb and with the long-term uptrend.

Should the pair drop below the .9800 level, there's additional support at from .9611 to .9518. This includes the .9537 swing low as well as the daily 200 SMA. However, this drop would confirm the head and shoulders or double/triple top pattern. The target of these is .8819. However, I'll wait until that happens before I try to confirm that number.

The initial support zone is wide at 179 pips but the pair is nearing its bottom. Probably the best action is to sit this out if you're an inexperienced trader. I know that nobody considers themselves inexperienced—after a few months of the trading wars, one can feel rather old. If one has to trade, one might try a buy near the bottom of the support zone with a tight stop. The other possibility, if things continue to look dire, is to sell a rally. The fibs of the most recent drop are .9929 to .9996.

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

EURUSD--retracement

Euro has retraced much of the move down from 1.4036, reaching a high of 1.3981 this morning. As long as prices stay beneath 1.4036, one can argue that the high was the end of an ABC correction from 1.2859. Remember, that high was within a strong resistance zone consisting of trend and speed lines. On the way down, the pair broke key support. There have been some bearish signals in different periods.

From 1.4036, it's possible to count five waves down to 1.3752 on the three-hour chart. As a result, this could be wave two. The rate of ascent is steep which is generally unsustainable. What I don't like on the hourly chart is the momentum, as represented by RSI. Note that it didn't drop that much. In addition, the low was almost at the 50% retracement of the 1.3429/1.4036 move. However, my bias is short and I may establish a short position. I'm looking at shorter periods to decide on this. The stop can be tight since over 1.4036 will tell me I'm wrong.

Support is at 1.3880, 1.3805, 1.3752/32 (recent low and .50 retracement), 1.3685 (fib confluence), 1.3500 and 1.3429. If prices start to edge above 1.40 and sustain a close over 1.4036, the next resistance is 1.4282/95 and 1.4317.












© 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 Numbers

Here are the high, low and close for last 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

With the destructive earthquake and tsunami off Japan, the market is in a risk averse mood and prices are dropping in many pairs. In a recap of the week so far as of 9:20AM EST:

AUDUSD has had a challenging week, dropping from a high of 1.0202 last week to a low of .9969 today. This is strong support—it includes the monthly pivot, the 100 daily SMA and confluence. Currently the pair is trying to base. If it can't then Aussie may be heading towards a weekly close lower than parity, something that hasn't occurred since the end of January. There has been no daily close below parity since February 15.

EURGBP has struggled with resistance this week with a high through yesterday of .8608, only one pip higher than last week. Lows have been mostly lower this week but Thursday's candle had a long lower shadow, indicating that the pair is rejecting lower prices. The low of the shadow was .8534. The pair has bounced back up to .8600. This should confirm the support zone in the .8500 range. There's a potential inverted head and shoulders pattern that requires a break.8672 for confirmation.

EURJPY hasn't followed through on last week's spike high to 116.01. Throughout the week, the pair lingered in a narrow range of 114.21 to 115.26. This morning, though, it's suffering from the risk aversion downdraft, dropping to a low of 112.93 so far today. This is bearish. It's having a tough time rallying. However, there is strong support in the 111.50/112.79 zone, provided by daily moving averages, monthly pivot, prior lows and .618 retracement of the 110.67/116.01 move. If this support zone fails, additional support is at 110.77 and 109.58. The bottom of the bear flag on the weekly chart is near 107.50.

EURUSD disappointed the Euro bulls this week, dropping from last week's high of 1.4007 to a low so far today of 1.3752. On the way, it destroyed key support at 1.3880/3800. Next is a support zone between 1.3732 (50% retracement and last week's low) and 1.3685 (fib confluence). Yes, risk aversion. However, as I wrote several times this week, the move from 1.3429, while strong, looked corrective rather than impulsive. In addition, the 1.4036 high looks as though it completed an ABC correction from 1.2874 on the daily chart. It satisfies a fib relationship as well. If the downtrend continues, it's in line with the longer-term weekly and monthly charts.

GBPJPY dropped to a low of 131.18 this morning, puncturing the 200-day moving average. It's possible that the Guppy will complete its .618 retracement and retest its prior low at 129.50/25. If it failed there, then expect 125.51. However, I'd expect a rally at some point. The pair recently broke above a long-term trend line and closed above the 200-day moving average. These are bullish signs.

GBPUSD has been hammered this week with lower highs each day this week. This morning things became worse—it pierced a prior low of 1.6032 and traveled on to 1.5977. Key support is at 1.5963. That's a .382 retracement of the entire move from 1.5345, the Feb. 11 low, and confluence. Below 1.5752, the outlook would be very bearish.


USDCAD has managed to stabilize a bit, staying above last week's low of .9684. Until yesterday, the high was .9767, still below last week's high of .9790. This morning it touched .9804. The 2008 low was .9711. This is a key support level and if the bulls can't defend it, the price target from the weekly triangle of .9549 is still possible.

USDCHF stayed above its dismal .9202 low from last week as well but isn't exactly robust. The high so far this week has only been .9369. Price needs to get above .9506.

USDJPY has been lackluster this week. The high has been 83.30. The low today has been 82.01. Bottom line is it's still within its range of 80.94 to 83.97. I'll continue to trade that range for now.

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

USDCHF—dollar slightly stronger

Yesterday's low of.9269 held for a slight rally in the pair up to .9363 so far today. This was near the prior high of .9369 so of course it's stumbling. While the dollar is stronger, the headwinds are formidable.

I did go long again at .9302 with my stop at breakeven. As I wrote yesterday, while the potential loss was 100 pips and that only a high of .9506 offered a decent 2:1 risk reward ratio, my plan was to move my stop to breakeven stop with a move of 30 pips.

Resistance is at .9363, .9506, .9586 and .9650. Support is at .9300, .9269, .9224 and .9202.

© 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—near support

Aussie is not immune to the negative mood, touching a low of .9992 so far today. However, it's on a daily speed line and approaching additional good support at .9988/68, consisting of a monthly pivot support, the 100 daily SMA, and confluence. A sustained move below this would be bearish with the next strong support at .9804.

However, as you can see on the daily chart below, the pair has been consolidating within a triangle. The more likely move is upwards. One can make an argument for a double/triple top or head and shoulders but neither of these exists until the confirmation occurs at .9804 for the double top and H&S and .9538 for a triple top.

Resistance is at 1.0197 and 1.0257. The pair needs to close above parity today. If it doesn't it will break a 17-day streak of having done so.

Here's the daily chart:












© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

GBPUSD—weak

Cable managed to reach 1.6243 yesterday but has fallen again to a low of 1.6039 this morning in the general weakness that has prevailed over some of the currency pairs. My long from 1.6162 stopped out at breakeven.

The low today is uncomfortably close to the prior low of 1.6032. It's not that far away from key support at 1.5963. This is .382 retracement of the entire move from 1.5345, the Feb. 11 low, and confluence. 1.6028 is the rectangle's lower boundary (outlined in gray on the three-hour chart below) so it lends support.

If the pair can't halt its slide here, the next support is 1.5995 (daily 50 SMA and confluence), 1.5891, and 1.5751/25, the .618 retracement as well as below a long-term daily trend line. This would certainly support that the high of 1.6344 was the end of a monthly ABC correction.

If the pair can recover before slipping beneath 1.6032, then resistance is at 1.6198 and 1.6243. Beyond that, look for a rally, possibly making it to the 1.6367, the weekly resistance line or 1.6465, the price where wave C would equal A on the weekly ABC correction.

Here's the 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.

EURUSD—at support

I'm still short from 1.3924.

Euro has dropped to key support, touching 1.3805 this morning and forming a hammer on the hourly chart. The .382 retracement of 1.3429 to 1.4036 is 1.3803 so this is key support. If this doesn't hold, the next support is a zone between 1.3732 (50% retracement and last week's low) and 1.3685 (fib confluence).

The reasons I'm short, as I wrote yesterday, are that the move up from 1.3429, even though strong, didn't look impulsive. As a result, if it's not impulsive, but moving within a rectangle, it is corrective. In addition, the 1.4036 high looks as though it completed an ABC correction from 1.2874 on the daily chart. It satisfies a fib relationship as well. Third, is the extreme sentiment against the USD and finally, the longer-term charts, weekly and monthly, show a downtrend in place.

On the hourly chart, I can trace five waves down to show an impulsive move that doesn't violate any Elliott rules. This is another hint, although not definitive, that 1.4036 was the high. Euro also violated a trend line from 1.3529.

After five waves down one would expect a correction. There is negative divergence between price and RSI. I've also traced out a faint ABCD pattern (suggesting a harmonic butterfly). Both support the idea of a correction. I'll take some partial profits here, knowing I can add to my position on the retracement or on a breakout below support.

Where might that correction go? The violated trend line at 1.3887 is one possibility. It would be very bearish if the pair touches that trend line and reverses. 1.3950/60 is the next possibility. If price gets much beyond there, I'd suggest that the pair might be taking another run to break the 1.4036 resistance.











© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

USDCHF—.618 holding for now

The pair has touched a low of .9269, .618 of the recent move up and the point where it took out my long position at breakeven.

Now I need to decide whether to enter again at .9300. The potential loss is 100 pips. Resistance is at .9360, .9506, .9586 and .9650. Only .9506 offers a decent 2:1 risk reward ratio but I can set a breakeven stop with a move of 30 pips or so. I can also watch price action at the .9300 mark and see if momentum provides a better clue. The reason I'd consider getting back in is the reason I went long in the first place. The dollar may have touched an important low. In additon, it looks as though the .618 will hold. We'll see.

© 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—key support at 1.5963

After cable's March 2 high of 1.6344, the pair closed yesterday at 1.6159, below the 10- and 20-SMAs. This is the fourth, daily, lower close and the third day of lower highs. The high met long-term trend line resistance and was near the target for a monthly C wave at 1.6324. That, though, is if C is equal to .618 of the A wave so it is possible the pair is gearing up for another push upwards. I'm long from 1.6162.

A look at the weekly chart below shows that cable in the middle of an upward sloping rectangle. It is near a weekly resistance line at 1.6367 but if it can manage to push above this then it should be able to reach the top of the rectangle. The weekly ABC correction could have C ending at 1.6465 if C equals wave A (1.6192 was .618 of A).

As of now, the pair is well above key support. 1.5963 is the first key support level. This is .382 retracement of the entire move from 1.5345 and is the Feb. 11 low. Below 1.5751/25 would be very bearish as it would violate a long-term daily trend line and a prior low as well as be the .618 retracement from the move up from 1.5345.

Here's a 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.

EURUSD—unstable

Euro looks somewhat unstable since its 1.4036 high Monday. The low of 1.3856 this morning may have established a trend line low (second touch off the low of 1.3526). This would make sense as support since the February high was 1.3855. The .382 retracement of 1.3429 to 1.4036 is 1.3803. In order to maintain a bullish outlook, Euro needs to hold above this. If it doesn't, the next support is 1.3732.

I reversed the remainder of my long at 1.3924 (+ 58 pips after partial profits at +140 pips). I took partial profits and moved the stop to breakeven this morning.

The entire move up from 1.3429, while strong, doesn't look impulsive to me on the three-hour chart. No matter how you try to count it, you have wave four entering into wave one territory and that's something that can't happen with Elliott Wave. As a result, if it's not impulsive, but moving within a rectangle, it is corrective. On the daily chart, one could count an impulsive move but until price overtakes 1.4282, it's debatable. That's one reason I felt OK trying a short position.

Another reason is that on the daily chart, the 1.4036 high looks as though it completed an ABC correction from 1.2874 and it satisfies a fib relationship as well.

A third reason was the extreme sentiment against the USD. Finally, I think the longer term charts, weekly and monthly, show a downtrend in place.

I'll be willing to reverse again if signs point to that which is all you can do if you're going to trade charts. Let's face it: do you want to be "right" in your opinion or do you want to make money? That's the choice that should govern your trading.

Support is at 1.3900, 1.3880/56, 1.3803 (.382 of the move from 1.3429 to 1.4036) and 1.3732.

Resistance is 1.3950, 1.4036, and 1.4282/95 (Nov. 2010 swing high and weekly downtrend line from July 2008).

Here's the 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.

EURUSD—stumbling

After Euro's high of 1.4036 yesterday morning, the pair is stumbling, falling to a low, so far, of 1.3913. That was expected—the pair was at the top of the resistance zone made up of trend lines, speed lines and price targets.

The bulls were strong enough to prevent an evening star formation on the three-hour chart that I wrote about yesterday. However the next candle after the third one was deeply bearish.

Support is at 1.3900, 1.3880/60, 1.3803 (.382 of the move from 1.3429 to 1.4036) and 1.3732.

Resistance is 1.4036, 1.4282/95 (Nov. 2010 swing high and weekly downtrend line from July 2008) and 1.4317/47.

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

USDCHF—3 hour

Yesterday I bought this pair at .9269. It had a nice rise overnight but we'll have to see what happens as NorAm wakes up and weighs in. It's more than possible that some big organization in the USA, i.e. how do you spell central bank here, will beat the dollar down again as soon as it sees that it has rallied.

On the hourly chart (not shown), there's a completed evening star formation. The same thing could be in the process of forming on this chart. If so, support is at .9300 (.382 and prior price low), .9285, and .9269. The latter is the .618 of the recent move up and near where I bought but I've moved my stop to breakeven so I'd be out.

Resistance is at .9360, just above the recent high and at the top of the rectangle and near a speed line. After that it's at .9506, .9586 and .9650.

Here's the 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.

USD Index—weekly

With all the negative sentiment, the greenback has continued to hold its uptrend line. This shows that if everyone is selling, there's nobody left to sell.

As I wrote last week, as long as it stays above 75.62, it's reasonable to expect a rally. There is no outstanding negative sell signal on the weekly chart. The trend, as difficult as it is to believe, is up for the last three years. However, there are strong rallies and equally strong pullbacks. The move down over the past eight weeks has a steep angle of descent which is difficult to maintain so I'd expect a rally because of this alone. In addition, the pair is also at the lower trend line. The next move, just as on the monthly chart with its triangle (not shown) should be up.

I wrote last week that the price targets for the monthly chart were 83.65, 85.00 and 87.73. The weekly chart adds a lower target of 79.02 (the downtrend line from the 2010 high of 88.66). Overcoming the prior high would require rising above 81.44.

RSI looks OK on the weekly chart. Note that it never dropped below 30—oversold—since 2008, despite the bearish sentiment.

If the index drops below 75.62, watch if it moves below 74.16. That would confirm a double top with its uh-oh connotations.

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.