EURUSD—weak

My small long position from 1.3403 stopped out at 1.3367 early yesterday morning. I then tried a short at 1.3372 which is now at breakeven. The pair is stalling. It seems to be the nature of the markets this week—the pairs don't seem to want to take a clear direction which is only saying that traders don't see a clear direction. Eventually this will work its way out.

Arguing from an Elliott Wave perspective you could say the pair should be rising as a correction from the wave down from 1.5144 to the recent low of 1.3267. If so, one should expect a rise to at least 1.3818 and probably further. This would be wave two. Then three could begin. However, at least this morning, it doesn't seem as though that's unfolding. From a cycle analysis point of view there is downward pressure on the Euro so that may be interfering.

The last hourly candle was a hammer. A drop below its low of 1.3334 will negate its bullish signal and be a sign of further weakness. There is bullish divergence, though, on the hourly chart.

Support is at 1.3334, and 1.3267. Resistance is at 1.3409, 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.