Euro has continued to rise from its June 6th 1.1876 low and this may turn into a much-needed correction that could take the pair to 1.2500 or so. However, its attempts to grind higher are painful to watch and in no way do I believe that it won't continue down again, possibly to parity. While the immediate fears over the European debt crisis seem to have abated somewhat, there are deeper systemic problems that haven't yet been corrected. But I'm a technical trader and not a fundamental trader so I'll continue to trade the chart.
I've entered a small long position at 1.2254.
Looking at the three-hour chart this morning, you can see a break above prior support in the 1.2150 area so one wouldn't expect a drop below that if the current rally is going to continue. I'll be stopped out before it gets to that point but I may go long again there depending on price behavior. Additional resistance is at 1.2326, 1.2453 and 1.2673. The pair has moved over 70 RSI in the shorter-term charts so this may have to be relieved before additional highs are possible. On the other hand, a breakdown in RSI (below its uptrend line) along with a drop below 1.2150 in price could signal that the downtrend isn't yet complete. Still…who hasn't sold at this point? But, going along with this, there may not be enough buyers to keep a rally going. We'll have to see. Support is at 1.2216, 1.2150, 1.2117, 1.2045/25, and then prior lows.
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.