EURUSD—Still struggling with 1.50

The Euro hasn’t fallen yet and it’s within hailing distance of getting above the 1.5060 area that would invalidate the Elliott Wave (EW) analysis I posted on Friday. As I wrote very early yesterday morning, its momentum is still good.

I was out of town on business earlier this week and haven’t had a chance to do a lot of trading. But before I left for the airport yesterday morning, I took a look at Euro’s 15-minute chart. I decided to buy a small position at 1.4978. I then had to log off and didn’t get a chance to look at my account until last evening. At that point the trade actually looked a bit anemic to me. But I had no reason to close so I left it open. It finally rallied in late Asia, early European trading and I moved my stop to above break even this morning.

These were my reasons for buying on the 15-minute chart even though there was a lack of clarity on the 3-hour chart I’d posted earlier yesterday morning.

First, even after a series of bearish candles, the pair held above a prior low. I’ve placed an arrow on the chart below to show that. Second, was the momentum as measured by RSI. The positive momentum had been bugging me all weekend and into Tuesday morning. Why wasn’t it dropping? Third, on the five-minute chart (not shown) it had pulled out of a double bottom formation. Finally, sentiment was bullish about the US equity market. This sentiment may be misplaced but it’s there. For me, all this meant I could risk a buy.

I then had to leave for the airport and never checked it until early yesterday evening when it looked sort of blah. So I missed those three, long black candles that most likely would have made me believe I had been wrong. But notice the RSI still held its bullish readings—it wasn’t dropping into oversold. It barely missed my stop.

The pair climbed smartly this morning and is now in a range of 1.5019 to 1.5048. I moved my stop earlier to plus 10 pips profit. What it does during this correction will lay the foundation for its next move. The 1.5060 is a “sexy” target since so many would be proven wrong. It will have to definitively hold above there to be meaningful.

Here’s the 15-minute 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.