Thursday, October 7, 2010

EURGBP—testing former resistance

When last I wrote about this pair a week ago, it had met my price target and had a small pullback to .8662 after stumbling at good resistance of .8740. Since then it has rallied, reaching a high of .8805 this morning, no doubt helped by Euro's recent strength. This is near the May high of .8808.

Various price calculations I've made show this pair could get into the .9000/.9100 area without too much effort whereupon it would be forced back by strong resistance from Nov. '09 and Mar. '10 highs of .9150. Resistance before it gets there is at .8862/80 and .8937 (monthly downtrend line from .9805 high in 2008). Going long now requires waiting for a retracement. I think one may happen—price has moved a bit ahead of time since the .8068 low—and it is at the May high.

Support levels are at .8740, .8700/8690 (psychological and 10/6 low), .8647/30 (the daily 10 SMA and price support), .8467 and .8360 (daily 50 SMA). It's currently testing .8734 (former resistance) so it may be a buy opportunity but I'd prefer a bigger dip. Price below .8360 hints at lower lows but I'm not sure we'll see that.

© 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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