EURUSD—back to its snuggie

EURUSD dropped to a low of 1.4683. It was only Tuesday that I wrote it would get back to the 1.46 area. How prescient of me, right? No. It was the chart, remember?

In any case, this is a comfortable zone for the Euro—a snuggie of sorts. Look back to mid-September and early October to see it. A look at the hourly chart this morning shows a V-bottom. This hints that the move was too far, too fast. That’s the reason for the quick bounce. Typically these types of bottoms are followed by a rebound into some sideways movement. Think about why this makes sense. There’s a quick sell-off. Then it reaches a low nobody quite expected and not only people who were waiting for a pullback come into the market but those who tend to buy bottom points and those who buy into a rising market. But the selling may not be quite finished.

If you look at the hourly chart you see this is the third V-bottom for the Euro. Sure enough, it’s stumbling as supply and demand works itself out. RSI also needs to climb above the 50% level to support rising prices. Had I been trading at the earlier low I would have bought but that’s the breaks. It now needs to show some oomph to convince me of a long at this level. Here’s the chart:

© Dianne Fecteau, 2009. 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.