One can begin making a case for at least lightening up on or covering shorts, if not taking a long, because of the following:
1)It just touched support, an up-trending line from August on the daily chart.
2)Price is still in an overall uptrend from March. Say what you want about how it’s top-heavy (and I have), say what you will about Elliott wave counts (and I do), but the fact is that this pair keeps on hanging on. Euro bulls are fierce! I love my husband and kitty cats the way Euro bulls love their Euro. It’s incomprehensible that this little setback in reaction to NFP is going to cause them to give up. Of course, when they fall, they fall big. It’s as though they use all their energy keeping the pair going, not letting it have normal rest and potty breaks, so they have nothing left at the end.
3)On the 5- and 15-minute chart there is bullish divergence (OK, I’m groping a bit here) but I bet traders are going long as I write.
What I don’t like is the oversold reading in RSI. It’s lower than any reading on the three-hour chart since October. Gulp. Conservatism would have one wait until the RSI pulls out of oversold on the hourly chart. The trend line will hold or it won’t. I can go long if RSI starts to recover on the hourly chart. That would be a closed candle, hopefully bullish, with RSI above 30.
There’s reasonably good support at 1.4800/30 if this up-trend line doesn’t hold. Next best support after that is at 1.4620/37.
Here’s an hourly 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.