EURUSD—is that the extent of the correction?

Euro continued to tumble after NFP on Friday to a low of 1.3586. On the daily chart, that low was in the shape of a hammer. It since bounced to a high of 1.3714 today. On the three- and one-hour chart, you can see the zigzag or ABC bounce. I took another short position at 1.3686. My stop is already at breakeven. It wasn’t much of a correction—I can’t believe that Euro bulls can’t do better than this, particularly with some traders taking profits but there you go. As long as the pair stays below 1.3833/57, the overall trend looks to be down. That would be a decent short area if it does correct further to that point. If it breaks below Friday’s hammer, it will likely decline much further.

Support:

1.3586 (today’s low)
1.3432 (Mar and May ’09 lows)
1.3361 (Aug ’07 low)
1.3263 (June ’07 low)

Resistance

1.3714/43 (today’s and Friday’s high)
1.3755 (top of EW 1 from March low and June ’09 low)
1.3791/3800/3833 (.382 retracement from Feb 3 high, round number and July low)
1.3855/57 (Feb. 4 double top). I doubt it will get above here)
1.3931 (polarity)
1.4000 (Psych)
1.4101 (50% of move down from Jan 13 low)

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.