EURUSD—weak

The latest low is 1.3686. This is below the Oct. 19th 1.3698 low. Looking at the hourly chart one could trace five waves down to that low with current action being an abc correction. The highest probability, in my view, is that the pair might manage to retrace to 1.3836. Here wave c would equal a and Euro will run into resistance from prior prices and a trend line. If it closes above that, the next resistance is at 1.3894, 1.3926, and 1.4086.

If this is an abc correction, then look for the next wave to be a third wave (on this short-term chart) within an overall larger third wave that began with the 1.4282 high. Price will likely reach the 1.3335 area, the former resistance as well as a fibo.

Care and tight stops are mandatory. This is a strange market—all that QE easing in but no real movement in equities or in currencies. Lots of small ranges in the currencies. Better trades are coming but for me, I'm going to short any rally in Euro.

Here's the one-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.