On October 21, I blogged about how Euro was finally reached 1.50. Now, here it is again, touching a high of 1.5021 yesterday, then falling back, and now struggling again.
Looking at the chart, it may indeed make it past and reach a new high for 2009, just as the US Stock market did yesterday. Those holding shorts from last week that didn't have tight stops are not very happy. Elliott Wave people are not very happy (I looked around after my post yesterday--a lot of interpretations expect that 1.5060 to hold). Those who theorize the global financial collapse is coming aren't very happy. So who's happy? Obviously, anyone long the Euro that didn't get taken out in the dip overnight.
Based on the three hour chart this morning, the pair is clearly uptrending. The long shadow two candles back show it rejected lower prices. However the candle just before the current one is a doji that hints at indecision and uncertainty. No clarity there.
The RSI has dropped out of overbought. What this could mean is that it's regrouping for another run at the top. One thing I realized over the weekend is that on the daily chart, momentum, as measured by a simple Rate of Change (ROC) indicator, has not dropped lower than its June lows. This means there is still some energy behind the pair. It could keep it climbing. If the RSI drops below its trendline and if the price also drops below its trendline (thus confirming each other), then we can say the pair is exhibiting weakness. Until then it's not clear and I'd stay out of shorts. If price does drop back to the trend line and depending on what else is happening, it might be worth trying a long.
Here's the three hour 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.
Tuesday, November 10, 2009
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