EURUSD—near tough resistance

The pair has rallied from its low of 1.2234 yesterday to 1.2433 this morning. That’s not great but it’s better than continuing to drop, right? Alas, now it is approaching the formidable 1.25 resistance zone. And there is still all the nattering about the pair heading for 1.2127 which would be 50% of the .8225 (10/2000) low to 1.6040 (July 2008 high). There it would also run into Elliott Wave projections since 1.2188 would be 1.618 of an Elliott wave one. We’re just going to have to wait and see.

One of my shorts (the one fom 1.2482) profit-stopped out at +70 pips. The other, at least what is left of it since I have taken the majority in profits, is from 1.2996.

One could try a small short around 1.25 with tight stops. However, just as the USD has had a steep rise, the Euro has had a steep fall and a further correction is not unlikely. There is positive divergence on the three-hour chart.

Support is at 1.2373, 1.2298, 1.2234, 1.2188, 1.2127, 1.1826 (the Feb. ’06 low) and then 1.1641. Resistance is at 1.2536, 1.2574, 1.2739/60, 1.2803, 1.2880, 1.2963 (Fib confluence), 1.3038 and 1.3094 (Monday's high). I imagine the sellers will come out in droves before any of those latter levels are achieved.

Here's the three-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.