I had an error in my blog yesterday in that I said I shorted at 1.2387. That was incorrect; I shorted at 1.2345. The chart showed the correct price. In any case, that short profit-stopped out at 1.2244 for +101 pips.
While I still believe the Euro is weak, I tried a long at 1.2165 late yesterday afternoon. I took partial profits at +70 pip. I went long because momentum didn't seem to be building for further drops. In addition, it looked like the pair was basing. Finally, it was time for some kind of rally after all and I could have a tight stop. The Euro advanced to 1.2343 before falling back to 1.2204. That's a stiff retracement and would seem to indicate the up trend is not too strong. However, momentum looks good and the overall move from May 25th looks corrective. On the hourly chart it looks as though the pair has completed an ABC correction. As a result, I just added a long position at 1.2208. Believe me, this is where the ability to have tight stops helps you enter a trade. I've just moved that stop to breakeven and I am more than happy to reverse and go short if need be.
Resistance is at 1.2343, 1.2388, 1.2416, 1.2574/99, 1.2673/99, 1.2740 and 1.2803. Support is at 1.2204, 1.2132 (50% of Euro's lifetime high/low or 1.6038/.8225), 1.20000 (psychological), 1.1826, 1.1641 and 1.1432.
Here is 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.