Euro looks somewhat unstable since its 1.4036 high Monday. The low of 1.3856 this morning may have established a trend line low (second touch off the low of 1.3526). This would make sense as support since the February high was 1.3855. The .382 retracement of 1.3429 to 1.4036 is 1.3803. In order to maintain a bullish outlook, Euro needs to hold above this. If it doesn't, the next support is 1.3732.
I reversed the remainder of my long at 1.3924 (+ 58 pips after partial profits at +140 pips). I took partial profits and moved the stop to breakeven this morning.
The entire move up from 1.3429, while strong, doesn't look impulsive to me on the three-hour chart. No matter how you try to count it, you have wave four entering into wave one territory and that's something that can't happen with Elliott Wave. As a result, if it's not impulsive, but moving within a rectangle, it is corrective. On the daily chart, one could count an impulsive move but until price overtakes 1.4282, it's debatable. That's one reason I felt OK trying a short position.
Another reason is that on the daily chart, the 1.4036 high looks as though it completed an ABC correction from 1.2874 and it satisfies a fib relationship as well.
A third reason was the extreme sentiment against the USD. Finally, I think the longer term charts, weekly and monthly, show a downtrend in place.
I'll be willing to reverse again if signs point to that which is all you can do if you're going to trade charts. Let's face it: do you want to be "right" in your opinion or do you want to make money? That's the choice that should govern your trading.
Support is at 1.3900, 1.3880/56, 1.3803 (.382 of the move from 1.3429 to 1.4036) and 1.3732.
Resistance is 1.3950, 1.4036, and 1.4282/95 (Nov. 2010 swing high and weekly downtrend line from July 2008).
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.
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