Friday, December 17, 2010

EURUSD—nowhere week

Euro has gone absolutely nowhere this week staying within a 316 pip range which is essentially the same range it has been in since the beginning of the month. On Tuesday there was a spike high to 1.3498; the low was 1.3182 yesterday and it's hovering not too far above there as of this morning. Bears would like to see a weekly close below 1.31 which seems a bit out of reach; bulls, on the other hand, would swoon over a weekly close above 1.35. This is out of reach.

The spike high on Tuesday is reminiscent of the Euro's spike high Dec. 18, 2008 (1.4721). On a weekly basis, it's causing a long upper shadow which is essentially bearish. A close below 1.3164 (last week's low) would result in an outside weekly candle. This may set the stage for further moves down. As I wrote Monday, I still believe the downward angle on the weekly chart is a bit steep so I'd like to see a rally to short.

Where might that rally go? The most recent high was 1.3359. You can see on the daily chart below that the Euro hasn't managed to break above a former uptrend line. That line is about 1.3392. Certainly a move to 1.35 would warrant a short position.

Support is at 1.3150, 1.3103, and 1.2969/33 (a fib and a speed line that has previously served as support).

Here's the 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.

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