On the daily chart it looks a bit messy with Euro coiling a bit, breaking up, breaking back down, and, in general, sullenly mulling about without a clear direction. I’ll start with the hourly chart, though.
Since last week it has dropped to a low of 1.4627, then climbed back to reach 1.5015. That’s still below the 1.5060 that I hypothesized could be the end of the ABC Elliott Wave (EW) correction from March. (That’s all you can do with EW or any approach is hypothesize and look for clues—there's no definitive answer). I shorted at 1.4961 based on the generally bearish candles on the hourly chart, along with the rounding shape of RSI which hinted at falling momentum. Now it’s approaching 1.4813, a level that has served as support on prior drops. Will it catch it this time? I can’t wait to find out. Meanwhile, I took some profits off the table this morning at 125 pips and the rest of the trade is profit stopped. If it breaks below that support level, the longer- and shorter term daily uptrend lines are near 1.4590. I may lighten shorts some more or reverse, depending on the candles that form on the 15-minute and hourly charts. While the pair looks top-heavy, it’s resisting falling. One hint on the hourly chart—if RSI starts climbing out of oversold and a bullish candle forms, one might consider a long. If I do that I’ll use tight stops.
On the daily chart, momentum still isn’t dropping off as represented by RSI. I’m not sure the upward ride is over but all one can do is buy dips and sell rallies until a direction sorts itself out.
Here’s the hourly chart:
Here's the daily 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.