EURUSD—broke the prior low

My three short positions stopped out at +23, +10, and +7 pips. I then shorted again at 1.3677. Obviously, this is now in profit with the new low this morning. I apparently wasn't confident enough to take more than one position which shows how the market can play with your head even when you're confident of your analysis. Also going against me this week was a new computer with new versions of all my software. This kind of thing is rattling (at least to me) and it throws me off my game. OK, back to the Euro.

Obviously, it has broken the low of 1.3586 which is good news (good, if you're not long this pair.) It didn't quite get back to kiss its broken trend line before doing so but, hey, whadda you do?) The pair has touched as low as 1.3532 so far, today. This is below the shadow of the daily hammer that formed Friday (and subsequent harami) which is a bearish sign indeed. Shorting rallies is the right thing to do and that's what I did yesterday when I shorted at 1.3677. Note that there is bullish divergence with RSI on the hourly chart (I drew the lines in blue).

Support

1.3586
1.3432
1.3361
1.3263
1.3000
1.2805 (the last uptrend line from Oct. 2008 which was last touched in March 2009)

Resistance

1.3586 (Feb 5 low)
1.3733 (broken short-term uptrend line)
1.3801 (Yesterday's high)
1.3839
1.4026
1.4194

Here's the one-hour chart:



© Dianne Fecteau, 2010. 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.