We had a black candle on the EURUSD last Friday and the pair obliged us and took on the candle to close it out this morning. The pair is currently testing the 1.3500 level, which will be key going forward in the next few days. A definitive move below there will be the third time in as many weeks. The real number to test is the 1.3450 level though. Price must break below this level or risk a significant pull back. Current 5 min bars are below the 1.3500 level as I am writing this post.

Now we will move on to the new currency pair for this month. I was considering the GBPJPY but have decided to follow the GBPCHF instead. I know that a lot of you may not follow this pair, but I am going to follow it for good reasons. I hope that you will follow along and learn as I present daily updates for the pair. This is one of the strongest pairs for identifying trend moves and counter trend moves. The statistics behind the moves on this pair are great, and I hope you will consider it as part of your trading groups.

To get started with, we have a black candle on this pair, created by the spectacular drop in European trade last night. The second interesting thing about this pair right now, is the almost 200 point Bounce created by significant oversold levels. These two things combined may produce a bounce back toward 1.6473. However, there are a few points of Resistance on the way. The first is 1.6300 and the second is 1.6400. Both were short term resistance on the way down. I might trade a break of 1.6300 with a target of 1.6400 and a break of 1.6400 with a target of 1.6450. To trade the black candle you would want to enter around 1.6250 with a target of 1.6350.

There is also a black candle further down that may get filled on further weakness. That candle comes in from 03/12/09 and would target the 1.5873 area. I am sure that target will come up in later posts this month. But for now I am looking for a return to the1.6400+ area. As I am writing, the pair is testing the 1.6220 level. That move lower and subsequent bounce was fantastic. Do not trade this pair if you don't know how to draw a line in that sand for losses. It’s daily ATR(14) is almost 30 points higher than the EURUSD and seldom goes below 150.

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