Euro is wavering in one of those narrow ranges so far this week between 1.4291 and 1.4384, no doubt by short-term fundamental, kneejerk focus on Greece. This is under key resistance at 1.4428/50. Even if it rallies above there, it's doubtful it will get beyond 1.4697 but of course that is a lot of pips between the two.
I am out completely as of now. My plan is to wait to find a selling opportunity. To do this, I'll use resistance and momentum on the hourly chart. Ideally, I would like to see a push to 1.45 or above where RSI moves into overbought territory (above 70). I would then wait for an hourly close below 70 and short at that point. That combination should provide for a tight stop.
The more bullish possibility in the short term is that Euro may be tracing out a butterfly pattern on the daily chart. Given that the upward sloping rectangle on the weekly chart (see Monday's blog) constrains prices between 1.3564 and 1.5368, 1.5308 (1.27 of the XA leg) is within that realm of possibility. For this to be possible, price needs to clear 1.4942 and there would probably be momentum clues well before then that the move up was gaining strength.
© 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.