Euro high last week was 1.4520 before dropping off to a low of 1.4267 this morning. This is major support since 1.4263/43 was a prior high and parity. Beneath that is 1.4227 (.382 of the move up from 1.3752) and 1.4223 (the broken long-term downtrend line on the weekly chart). Buyers may well enter. If the bulls fail to hold price there, then below that is a support zone beginning at 1.4166 down through 1.4103. Note that the pair is still within the rectangle on the weekly chart and could move up rather sharply.
On the weekly chart, there is a possible evening star forming. This is a three-candle pattern where the first candle is a strong bullish candle, the second is a much smaller sometimes doji star, and the third candle closing deeply within the first one. Forming at resistance, as it is, adds more significance if the close at the end of the week confirms the pattern. That is not tradable for many short-term traders but the way to trade it, if you believe it is going to happen, is to short rallies on the shorter-term charts.
© 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.