Euro touched 1.2779 Friday before falling to what seems to be the bottom of a small range with support in 1.2667 to low 1.27 area. I wrote last week that only if the pair breaks above 1.2775 can one expect more upward price probes, possibly to 1.28 or 1.29. It hasn't happened yet. Since 1.2775 was the .382 retracement level (1.1892 to 1.3335) the failure on Friday would have encouraged me to go short had I been trading.
The low on Friday was 1.2677. On the hourly chart the low was a hammer candle so it should serve as support. Just below is the Thursday low of 1.2667 and just above is the short-term uptrend line of 1.2687. Also worth considering are the daily simple moving averages. The 10 is 1.2747; the 50 is 1.2772; the 100 is at 1.2720.
A small long near 1.2675 is possible but where will the stop be? Below 1.2588 is safest but that's a bit rich given the illiquid market. If you don't mind losing it in a downdraft, you could place it below 1.2650. Safer would be a short on a rally. However, this is likely to be a slow week with the US moving towards its holiday weekend so the best position might be no position at all.
© 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.
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