Friday, May 28, 2010

EURUSD—rally continues for now

As of yesterday afternoon I had six long positions since I kept adding (or pyramiding) on the way up. These were from from 1.2165, 1.2208, 1.2254, 1.2283, 1.2296, and 1.2309. As of this morning, only the first three are left, the others having profit-stopped out at +34, +30, and +14 pips respectively. I also took partial profits on the position from 1.2165 for +216 pips.

Now what? After touching 1.2453, the pair is running into a bit of resistance and has fallen back to the breakout line (drawn on the hourly chart below). If it begins to have a series of closes inside the the ascending triangle, then Euro's little rally may be finished. However, false breakouts are common with these patterns so it's difficult to trade on this one pattern alone. More interesting is the prior resistance at 1.2383 which is where the pair currently is (as of 8:26Am EST) and the uptrend line, currently at 1.2275 which might be a good place to add another long. Momentum continues to look good as reflected in RSI and as long as that uptrend line doesn't break then the Euro might get to additional highs.If it can definitively scale 1.2453 (the level of the downtrend line from May 10 highs) then one could expect to see 1.2574. Should the pair start to fall again, it's possible one might see new lows today.

Resistance is at 1.2453, 1.2574/99, 1.2673/99, 1.2740 and 1.2803. Support is at 1.2383, 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's the hourly 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.

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