This pair is at an attractive support level, having dropped to a low of .8685 this morning. .8700 was a tough resistance price for the pair for much of the summer of 2009. In Jan/Feb of this year, the pair dipped no lower than .8603 and hovered at support of .8660 or so for much of that period. I just went long at .8703.
One problem is that I still have a price target of .8580 for this pair. I've been mostly short until recently (these trades haven't been in the blog). However, I can have a tight stop on this trade. If it drops much below .8580 I'd probably get out and study momentum more carefully before deciding what to do. Another long entry point would be .8603.
Looking at the daily chart you can see that the pair is coiling. A break in either direction would probably lead to a very large move.
Support is at .8660, .8603, .8500, .8456 and .8400. Resistance is at .8865, .9026 and .9130/50.
Here's the daily 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.