EURUSD hasn’t yet managed to bounce from the 1.4261 low it reached on the 18th. I’m still short from 1.4585. The second short I took last Friday from 1.4385, profit stopped out at 1.4356 for +29 pips.
Action seems confined, in general, to a downward sloping rectangle. If I was trading this week (and I’m not), I could have shorted again at 1.4373. Candle behavior supported the idea of shorting with the upper shadows and the almost evening star pattern. Evening stars are three-candlestick patterns that take place after an uptrend. First, there’s a bullish candle. A star follows. The third candle is a bearish candle that closes deeply within the first candle’s body. In this case, it closed below the first candle’s body which is why I wrote, “almost.” The pattern is bearish.
Note the morning star to the left when price touched the bottom of the rectangle. It’s the reverse of the evening star. It occurs after a downtrend with the first candle a long, bearish one, the second candle a star, and the third candle closing deep within the first candle’s body. If the price approaches the bottom of the channel again, a bullish candle or pattern would justify taking a long position but use very tight stops. The pair also seems to be trying to find support at 1.4280.
Be careful trading this week. In fact, try to take the week off. Here’s the one-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.