Wednesday, June 8, 2011

EURUSD—near strong resistance

Euro is approaching strong resistance and looks as though price action might be bearish around 1.4720. On the daily chart, one can trace out an Elliott Wave corrective count with the double zigzag peaking at 1.4942. If the pair closes above 1.4734, this count will be invalid. This would be .786 of the move down from 1.4942 and would suggest further price moves up. However, the lovely thing here is that one can short and have a tight stop since the market would be giving a strong message with moves higher than 1.4734. If anyone reading this is long, tighten stops and possibly take some profits.

Beginning on May 26, yesterday was the eighth bar of a Tom DeMark sell setup with today being the ninth candle. The candles since the 1.3970 low have been robust—they have opened near the low and closed near the high so this is bullish. Price has also exceeded the .618 retracement of the move down from 1.4942. However, the bullishness may be close to a point where a consolidation would make sense. A .382 pullback would bring prices down to 1.4419 (close to the monthly pivot of 1.4445) and 1.4334 would be 50%. A move below 1.4300 would be very bearish.

On the four-hour chart (not shown), there is negative divergence with RSI—prices moving up but RSI moving down. My plan is to enter short and see how it goes.

Here is the daily 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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