Tagged "RSI"

6-9-08

01:06 GMT – Part of being a successful trader is looking not only your own “comfort” chart time but also looking at the bigger picture as well. This week I chose to post my weekly chart analysis for EUR/USD, GBP/USD, USD/CHF and USD/JPY. I do the analysis on all the pairs I trade, and recommend you do the same for the “big picture” but don’t have time to post them all.

Want to see a different pair next week? Post your comments below!

EUR/USD: As you can see on the chart below the EUR/USD is still firmly in an uptrend unless a clean break of 1.5284 is made. EMA20 (green line) has been acting as good support for the pair since early 2007 and last week showed us a strong bounce of this support. A close this week above 1.58 would confirm the resumption of the uptrend and is likely. The last time the weekly charts looked as they do now was in late 2007 when the pair was in a 1.43-1.50 range, which ended up breaking to the upside off a bounce of the EMA20 and challenging 1.60. Look for a similar result in the coming weeks with a challenge of 1.70.

USD/JPY: I believe that since 6/07 the UJ pair has been in a good Elliot Wave model drop with the rally below 100 the last hoorah of the 5th leg. Whether we are in the 1st leg or the 3rd leg of the retracement is a matter of debate (what’s not in Forex? ;). Last week’s candlestick was bearish but did make a new high and showed decent buying pressure. I don’t believe the doji means much considering the pair has been in choppy trading for the past several weeks. I expect to see more gains this coming week, but this next week will help to show the direction of the pair. Also the RSI closed above 50 for the first time in almost a year. A concern is definitely the EMA30 which has provided resistance for the pair in the past and also the resistance at 106.35 (former weekly support). A close above 106.50 would clear the way for the EMA50 currently around 108.

The exponential moving averages are still aligned in a downtrend though the EMA10 has flipped up and if the retracement continues will soon cross the EMA20.

USD/CHF: Pair remains locked in a clear downtrend, is getting pushed down by the EMA20 resistance (solid resistance since 7/07) and its RSI has just bounced off of 50 to the downside after posting a bearish hidden divergence a few weeks back. Selling near the EMA20 looks like the best strategy though last week’s candlestick was a bearish engulfing so we may or may not get another opportunity on the weekly chart for awhile.

Major concern is that the pair is in the 2nd retracement leg of a 5-3 Elliot Wave model retracement (since the possible 5 wave drop beginning 7/07), meaning a third retracement to the 1.0750 area could occur before more losses.

GBP/USD: The GU pair continues in its bearish channel since the trend reversal on 11/07. Two weeks ago we had a bearish doji that was NOT confirmed by a bearish close under the previous candlestick. Instead we saw a wave of buying at the end of the week courtesy of the ECB comments about the Euro rate increase. Until we see a close above 2.02, though, the pair remains bearish. From the weekly chart below we can see the best strategy for the week will probably be to sell of channel tops.

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6-4-08

18:12 GMT – AUD/USD has been caught in a bearish channel beginning on 5/18 and I expect trend resistance currently at 1.9630 to hold and repel any stabs upward. RSI also crashed off its bearish channel resistance (near 70) and pair appears to be reversing down. I expect the the pair to encounter firm support around .9550 and would cover any bounce off of this until the charts give us a directional bias at that level.

Trading Idea: Wait for bearish candlestick to confirm trend reversal and enter short around .9620 with targets at .9675 and .9660.

UPDATE – 21:36 GMT – both targets hit for 65 pips. Will enter short again if pair breaks .9550.

Result: +65 pips

Analysis: Good trade. At the same time a single long wick touched resistance the pair also hit 70 AND RSI resistance and then began a bearish RSI divergence.

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5-23-08

9:15a GMT – GBP/JPY is looking to bounce of double-strong support of: a) 38.2% fibonacci retracement of 202.8-206.5, and b) strong former resistance and now support at 205.00. See chart below. Fib is light blue and support is dark blue. Also RSI is touching strong channel support as well (green line on RSI chart). Slow SS is also flipping up on 60M.

Trading Idea: I expect pair to dip down to 205 (current price is 205.36) before heading back up. I would wait for a bullish candlestick in this area to confirm the trade and then enter long with targets at 206 and 206.5. If support is broken look for 204.70 (50% Fibonacci) and 204.25 (61.8% Fibonacci).

Result: -50 pips

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