Euro bounced around quite a bit this morning. After NFP it leapt to a high of 1.3984. Then it sank to 1.3833. If you could catch the short you would have made a little money but I'm not keen on trading around news events. Now it is trying again, reaching 1.3945 before faltering.
So the question is—will she climb or will she drop? Nobody can definitively answer that but trading is about probability. Here is what supports the argument for a drop:
1) The angle of the recent ascent is too steep to be maintained.
2) The pair is very overbought
3) It's at the top of what is a reasonable Elliott Wave count for a correction
4) Yesterday was a doji hints the uptrend is stalling
If prices start to edge below 1.3820 then there will probably be a deeper correction and perhaps the renewal of the overall downtrend. A correction could mean only a consolidation. Next week should bring in more information. Overall, though, I'm still leaning towards short entries. However the charts can change my mind.
© 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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