Tuesday, November 23, 2010

EURUSD—near support zone

Low so far this morning is 1.3493, tantalizingly close to last week's hammer low of 1.3447. As I wrote yesterday, the weekly 20 EMA (currently at 1.3457) served as support last week. 1.3436 is 50% retracement of the move from 1.2588 to 1.4283. All this adds up to a support zone. Additional support is at 1.3348/35 (a fibo and the August high), 1.3270 (weekly uptrend line) and 1.3235/33. Resistance is at 1.3634 and 1.3786, 1.3800 and 1.3865. Prices over 1.40 are mere bullish hopes and dreams at this point.

Is this a resumption of a bigger correction, one that could take Euro down to at least 1.20 and possibly further? It's not entirely clear it is—certainly the bears hope so. We'll just have to watch it over the next week or so. We're entering an illiquid market in the NorAm time zone as the US moves towards Thanksgiving so better clues may be detected during European market hours. We're also moving to year end when many will take profits. Since Euro has been in an uptrend since June, it's going to be impacted by this which will add to the pressure on prices (excess supply).

On the three hour chart, one can see it has dropped below an uptrend line and isn't yet oversold. Lower lows are likely. I'm short from 1.3638 and will probably take some profits in the support zone.

Here's the three-hour 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.

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