A look at the weekly chart shows the Euro at the bottom of an upward sloping channel which I'm tempted to label as a bear flag. It's also possible to label it as an Elliott Wave correction with the possibility of a larger flat correction unfolding. The top of the channel would bring Euro to 1.4543. Many would think this possibility is ludicrous—the Euro is basically junk. Consider, though, that the U.S. government seems intent on keeping the USD weak. Bernanke was on "60 Minutes" last night suggesting the possibility of more quantitative easing.
The weekly candle has a long lower shadow and just barely qualifies as a hammer. A hammer requires that the lower shadow be at least twice the size of the real body. In any case, the low of 1.2969 is a low which must hold for bulls to have any hope. Euro is currently trying to base at a fib confluence point with lows so far this morning of 1.3247. Below this is support at 1.3195, 1.3160, and the psychological 1.30.
Resistance is at 1.3379 and 1.3439. If it definitively closes above the latter, then the bullish case is strengthened.
Here's the weekly chart. My trades don't show on the weekly chart as I use a different package for longer term charting.
© 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.