The pair has continued to rally, reaching a high of 1.5078 this morning before falling back 60 pips and is now approaching the high again. I suspect it will break through once it overcomes the current resistance. To get here it broke through formidable resistance at 1.4950 to 1.4980 and Friday was an outside up day so things look good. Risk sentiment is better today as well.
The next resistance level where a short might prove worthwhile is 1.5225. If you look at the daily chart below you see an ABC correction with the pair currently in the C wave. If C is 1.618 the length of A, then that targets 1.5222. In an Elliott Wave zigzag correction, the B wave is typically 50 to 78% of A. B retraced 78%. 1.5355/74 would be the next logical resistance zone. 1.5374 is a downtrend line on the weekly chart. 1.5355 is a downtrend line on the daily chart since November. After that price zone, there is the psychological 1.5500.
So is there a way to trade this on the long side? One could buy on a clear break of 1.5078 or buy a pullback to 1.5018 and I may, in fact, do that as long as momentum on the short-term hourly chart looks good.
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.
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