© 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.


EURUSD—big drop

So far, Euro unfolded down from the Friday 1.3350 high to a low of 1.2780 today. This drops it below the daily 100 SMA, currently at 1.2805. I'd expect a bit of a bounce here as it corrects this big move and begins to work out some of the positive divergence with RSI on the three- and one-hour chart. The pair has clawed its way back to 1.2861. Certainly, part of the reason for this big move is the lack of liquidity in August trading markets.

You could have bought with a tight stop as it bounced off the low or you can wait until it retraces some of this drop and sell. I'll be on this pair closely.

Support is at 1.2805, 1.2780 and 1.2683/75 and 1.2620. Resistance is at 1.2870, 1.3000, 1.3050, 1.3125, 1.3226, and 1.3335.

Here's the three-hour chart: