Thursday, June 16, 2011

EURUSD—at weekly uptrend line

The Euro has continued down, touching 1.4074. This is near the lows of May 13 and May 16. The 100-daily SMA (currently 1.4159) failed to serve as support, something that occurred in both February and May. Price is sitting on an uptrend line on the weekly chart (drawn from January). A break of this would be significant and would confirm the break of the RSI trendline.

The bear flag target of 1.3994 is within sight.

It appears likely that, as I wrote on Monday, this is the third wave down with the move up from 1.1876 being a double zigzag correction. If so (and I’d be cautious here as the markets have shown a tendency to swing one way or another depending on the risk assessment de jour), then there is a lot further to go. The best strategy would be to sell weak rallies. There is still a chance this could be an ABC correction with this being the C leg. Additional targets if that is true are 1.4046 (C = .618 A), 1.3675 (C = A) and 1.3074 (C = 1.618 A). Paying attention to price and momentum behavior between 1.3994 and 1.4074 should offer clues as to where things go from here. If price gets below 1.3862, it destroys the bullish Elliott Wave count (see Monday’s analysis).

Resistance is at 1.4129 (the weekly 20 EMA), 1.4151/86, 1.4234/88, and 1.4320/50.

Here’s a weekly 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.

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