EURUSD—looking to short

Euro climbed to a high of 1.3609 overnight. This is within my 1.3590 to 1.3650 range that I wrote about yesterday. There were several reasons this zone was possible. First, the .382 retracement and confluence are together at 1.3594. Second, the upper boundary of the channel and the 50% of the retracement of the move down are found at 1.3642. Finally, at 1.3617, a downward trend line from 1.3862, an upper boundary of the bear flag, and a short-term speed line converge. As a result, I'm still looking for a short on weakness in this area.

If it makes it past this area, well bully for it. Then I'd be watching the 1.3697 to 1.3769 zone for possible weakness as I explained yesterday. Beyond that…the uptrend has resumed. As I noted yesterday, this channel could also be a daily flag so close attention needs to be paid at its upper boundaries because the target for this is 1.4282. This isn't a possibility until the pair settles above 1.38.

I'm thinking, though, that this could be the beginning of the third of a third wave on the three-hour chart which should move price quite a bit down. Remember that the area between 1.3451 and 1.3462 is well-defended so that's strong support.

Here's the three-hour chart:













© Dianne Fecteau, 2011. 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.