EURUSD—approaching strong resistance

Euro has continued up. I've been blogging this week that I'd short around 1.30 or so and it has achieved that this morning in what looks as though is going to be a strong candle on the three-hour chart. So I'm holding off a bit longer to the 1.3775 area. At that point price will be at an upper trend line formed from the ABC rally (using Elliott Wave guidelines) as well as near a strong resistance area on my point and figure (P&F) daily chart. There's price resistance from March. It will also be near the .618 retracement of the long move down from 1.5144 to 1.1877. It's not likely the pair can maintain its recent steep angle of ascent. On a minor—very minor given the Euro's short history—some traders believe that October is a weaker month for Euro. That said, there's additional room for movement into the 1.3860 area so there's risk and finding a tight stop will be a challenge.

Bottom line here is I'm still looking to short but I'm holding off a bit. Should Euro begin to fall then the first strong support is 1.3335. That would make sense given that's the last strong resistance and it would probably like to give it one more kiss before it takes on another upward march or plunges down into what will be chilly waters indeed.

As I mentioned above, Euro could push into the 1.38 zone without it meaning much. However, if the pair sails on up through that, I'll change my bias to long.

Here's a 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.