Wednesday, January 19, 2011

EURUSD—broke above resistance

Euro broke above resistance at 1.3457 and 1.3500 with a high so far today of 1.3539. It needs to close above these levels to remain bullish. If it does, the price target is 1.3842/65. I arrived at those using the three-hour bull flag on the three-hour chart and calulating the potential wave C of the Elliott expanded flat that seems to be unfolding. I've drawn the bull flag on the three-hour chart below. I also noted where prices corresponded to the wave count I placed on the daily chart yesterday. There's also a fib and polarity at 1.3887. All this would create potential for a return to the 1.4283 November high. Bulls would rejoice as would the Eurozone finance ministers.

On the down side, it is wise to remember that Euro is in a downtrend in the larger picture and this is an overall corrective move. It's also resolving the positive divergence on the daily chart that I blogged about yesterday. The first support is at 1.3244. A close beneath there turns things bearish again and opens support at 1.3000, 1.2969, and 1.2850. After these levels, price would probably begin to accelerate downwards to 1.2500.

So what are my plans? Until I get some other signals I'm staying flat for the moment. I'll be looking for failure through such things as shorter-term divergences and patterns that may develop in the short term. If that doesn't happen, I'll buy on a retracement.

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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