My long from 1.2254 stopped at breakeven. I went long again at 1.2236 and entered another long this morning at 1.2244.
Since early Monday the Euro has appeared to be basing in the 1.2164 area but it's not exactly setting the world on fire, even though there have been five days of higher highs and higher lows. yesterdat, 1.2299 was the high. It's high this morning, so far, has been 1.2276. It needs to close above the 20 day SMA (simple moving average) on the daily chart since price has been below there since April until yesterday. The SMA is currently at 1.2221. Whether it will or not is still a question. Whereas once Euro bulls dominated (remember those days?), now it's the bears who don't want to give up their dominance.
There's hidden divergence on the daily chart (lower high in price and higher high in the RSI) which hints at a continuation of the downtrend. Since I still believe the Euro is weak and because of this divergence, you might ask why I'm long. The reason is that I don’t believe the pair can drop much more until there's a rally of some sort. Prices don't go straight down after all and who is left to sell the damn thing right now? From an Elliott Wave perspective the pair seems to have completed a fifth wave and with yesterday's high of 1.2299 moved back to a 4th wave triangle. One would expect some resistance there. There's also a short-term trend line on the daily chart coming in at this level.
If the pair can get through this then it's very believable it can climb to 1.2575/83. As long as the Euro stays above 1.2150/65, this is a good possibility.
Resistance is at 1.2299, 1.2326, 1.2453 and 1.2673. Support is at 1.2216, 1.2164/50, 1.2117, 1.2045/25, and then prior lows.
Here's the daily 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.