EURUSD—too much, too fast

I just closed my short position from 1.4074 for +373 pips. I also took partial profits on the position from 1.4003 (my last short) at +300 pips.

What I’d like to see is for the pair to take a breather and have some sort of decent correction. Admittedly, it doesn’t look as though it’s doing that except for the hammer that showed up on the one-hour chart. There’s also positive divergence with RSI on that chart. On the other hand, what could be construed as a descending triangle could be forming although I’d prefer more touches to each side. If there’s a definitive move below the hammer’s shadow of 1.3647, the drop may continue.

One thing to remember is that US non-farm payroll is coming out this morning at 8:30 EST so there could be some bouncing around.

Support:

1.3647 (today’s low)
1.3571 (polarity)
1.3432 (Mar and May ’09 lows)
1.3361 (Aug ’07 low)
1.3263 (June ’07 low)

If the pair exceeds the 1.3755 area, I think one can expect a larger correction.

Resistance

1.3727 (overnight high)
1.3739/55 (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)
1.3931 (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.