Weak it may be but this is a good example of how you can fail to make money with a pair that is weak. My short from 1.3372 stopped out at breakeven on the slight rise to 1.3378. Had I been on top of the situation—i.e. actively trading—I would have caught it and reinstituted a short position, particularly since I had taken on another short below that point prior to the stop. But I wasn't. As a result, even though the pair then dropped again I didn't gain from it. I'm not regretful because one, I didn't lose money and two, these things happen. I've been fighting a flu this week and it definitely is affecting my trading. At least most of the pairs are as listless as I've felt so I haven't missed a lot of great moves. But the point is that if you're short-term trading, these things can get away from you.
Back to the Euro. My short is now from 1.3329. The pair dropped to a low of 1.3283 this morning and is now rallying a bit. 1.3402 was yesterday's high so the drop has not been dramatic. Basically, the Euro is puttering about, either delaying the inevitable (a drop to 1.29) or continuing a corrective wave two that would reach to at least 1.3818.
There's bullish divergence on the hourly chart. Divergences are present in many of the pairs and this indicates a confused market. It will sort itself out. If the market begins to press below 1.3267 or if the rally looks as though it's gaining momentum, those will be clues one way or the other. However, this waffling can continue for a while.
Support is at 1.3283 and 1.3267. If it breaks that, it's a new ballgame (one hopes). Resistance is at 1.3402/9, 1.3477/86, 1.3529 (strong) and 1.3591.
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.