Euro has rallied to 1.4299 in what appears to be an ABC correction on the hourly chart (Wave A is 1.4074 to 1.4222; wave B drops from there to 1.4128). This means C has the potential of 1.4219, 1.4276, and 1.4367 so price is just above the point where C would equal A. The 50% retracement of the move down from Tuesday's high of 1.4497 is 1.4286; .618 would be 1.4335. There is additional resistance up to 1.4445 and of course the prior high of 1.4497. The latter is key resistance—if that breaks then it negates many bearish signals.
Price has not met the bear flag target of 1.3994. What is troublesome is that if one examines RSI on the daily chart, it is maintaining itself above 34.92, the low of RSI in January. That needs to start dropping to support the idea that the bearish view is the correct one. Euro also managed to stay within support (the internal 45° line) on the daily and three-hour point and figure charts I maintain.
Nonetheless, the case is still there for being in a third wave down. Let's see what unfolds.
© 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.
Friday, June 17, 2011
Thursday, June 16, 2011
EURUSD—testing interim resistance
Euro is testing the uptrend line drawn on the daily chart from January with the high so far today of 1.4178. This resistance is reinforced by the fact that it’s a fib confluence zone—the .382 retracement of 12874/14942 is 1.4152 and the .50 retracement of 13429/14942 is 1.4186.
I’m of two minds about this type of resistance. If it keeps battering at it, Euro may break through. On the other hand, another rebuff could send it back to its downward slide.
If this is an ABC correction on the hourly time frame, potential C wave targets are 1.4178, 1.4217 and 1.4281. The first one supports the high as resistance so I may add a short position with a tight stop. One must keep the weekly support line in mind, however.
© 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.
I’m of two minds about this type of resistance. If it keeps battering at it, Euro may break through. On the other hand, another rebuff could send it back to its downward slide.
If this is an ABC correction on the hourly time frame, potential C wave targets are 1.4178, 1.4217 and 1.4281. The first one supports the high as resistance so I may add a short position with a tight stop. One must keep the weekly support line in mind, however.
© 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.
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.
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.
Wednesday, June 15, 2011
EURUSD—new low
Euro touched 1.4206 but in doing so formed a hammer on the 15-minute chart with positive divergence. I think it can get lower—at least to 1.4155 (the daily 100-SMA) and maybe 1.4096 but it is probably time to take some profits. I have two short positions—one from 1.4581 and one from 1.4447.
© 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.
© 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.
EURUSD—trying to base
Euro has dropped to a low of 1.4264. The bear flag target (see yesterday's blog post) is 1.3994 so obviously it has a way to go. However, it may be trying to base for a recovery.
The hourly candle's low that completed at 9 AM was 1.4264; the one that completed at 10 AM was 1.4265; and the one that just completed at 11 AM was 1.4272. Yesterday, I wrote that 1.4288 was support. If the basing attempt fails, the next support level is 1.4236, 1.4186/51 (50% of the move from 1.3429 to 1.4942 and the daily 100-SMA and near .382 of 1.2874/1.4942). After that is 1.4096 (C wave target if .618 of A (see Monday's analysis), and 1.40 (psychological).
If it consolidates before additional downward price movement, expect it to reach a high of 1.4347/53 or 1.4378/90 before turning down again. Above that should find resistance at 1.4444. I would be highly suspicious of additional downward moves if it regained that much. However, there have been a lot of back and forth in the markets as uncertainty continues to cast its shadow.
© 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.
The hourly candle's low that completed at 9 AM was 1.4264; the one that completed at 10 AM was 1.4265; and the one that just completed at 11 AM was 1.4272. Yesterday, I wrote that 1.4288 was support. If the basing attempt fails, the next support level is 1.4236, 1.4186/51 (50% of the move from 1.3429 to 1.4942 and the daily 100-SMA and near .382 of 1.2874/1.4942). After that is 1.4096 (C wave target if .618 of A (see Monday's analysis), and 1.40 (psychological).
If it consolidates before additional downward price movement, expect it to reach a high of 1.4347/53 or 1.4378/90 before turning down again. Above that should find resistance at 1.4444. I would be highly suspicious of additional downward moves if it regained that much. However, there have been a lot of back and forth in the markets as uncertainty continues to cast its shadow.
© 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.
Tuesday, June 14, 2011
EURUSD—bear flag
On the four-hour chart, Euro may be forming a bear flag. This pair loves to stair-step its way down so this would be in line with past price behavior. The .382 retracement of 1.4697/1.4288 was 1.4444. Price reached 1.4472 in the hour ending 7 AM EDT and for the hour just ended (8 AM), the high was 1.4468. The weekly pivot calculation is 1.4455. I would not rule out a move to 1.4493—the 50% retracement—or 1.4541, the .618 retracement. The latter is just above 1.4538, the .382 retracement of 1.4942/1.4288. Regardless, the zone between 1.4444 and 1.4555 is strong resistance.
Should the stinker—sorry, Euro—get above there, it means the pair would have regained the broken short-term trend line. After that, 1.4697 should cap prices. If it does not do so, there is little resistance to the high of 1.4942.
Support is 1.4406/4378 (.382 of recent move up, confluence, near flag breakout point, polarity), 1.4348, 1.4288, 1.4186/51 (50% of the move from 1.3429 to 1.4942 and the daily 100-SMA and near .382 of 1.2874/1.4942), 1.4096 (C wave target if .618 of A—see yesterday's analysis), and 1.40 (psychological). The bear flag target is 1.3994.
I'm leaning bearish, obviously, as I added another short position. However, closing prices on both my daily and three-hour point and & figure charts, show potential breakouts to the upside. I would take them seriously if they occur.
Here's the four-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.
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.
Should the stinker—sorry, Euro—get above there, it means the pair would have regained the broken short-term trend line. After that, 1.4697 should cap prices. If it does not do so, there is little resistance to the high of 1.4942.
Support is 1.4406/4378 (.382 of recent move up, confluence, near flag breakout point, polarity), 1.4348, 1.4288, 1.4186/51 (50% of the move from 1.3429 to 1.4942 and the daily 100-SMA and near .382 of 1.2874/1.4942), 1.4096 (C wave target if .618 of A—see yesterday's analysis), and 1.40 (psychological). The bear flag target is 1.3994.
I'm leaning bearish, obviously, as I added another short position. However, closing prices on both my daily and three-hour point and & figure charts, show potential breakouts to the upside. I would take them seriously if they occur.
Here's the four-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.
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.
Monday, June 13, 2011
EURUSD—daily chart
On the daily chart, one way to interpret the action from 1.1876 is from a bullish point of view as Euro makes its way up an upward sloping rectangle. The wave action would be:
Wave 1: 1.1876 to 1.2467 (591)
Wave 2: 1.2467 to 1.2152 (315)
Wave 3: 1.2152 to 1.3335 (1,183)
Wave 4: 1.3335 to 1.2588 ((747)
Wave 5: 1.2588 to either 1.4159 (1,571 pips) at which point began an ABC correction or to 1.4274 (1,686 pips) which then initiated a correction down to 1.2874.
That meets the three inviolate rules of an impulsive wave—wave three is not the shortest wave; wave four does not poke into wave one's territory, and wave two doesn't retrace more than wave one. The purpose of an impulsive wave is to make forward progress and price did do so. The action from 1.2784, though, is less clear. Bulls might say that would be the beginning of wave three. However, if it was then:
Wave 1: 1.2874 to 1.3862 (988)
Wave 2: 1.3862 to 1.3429 (433)
Wave 3: 1.3429 to 1.4942 (1,513)
Wave 4: Either it completed at 1.3970 or it is still in process. If it is still in process, then B topped at 1.4697 and C can go no lower than 1.3862 (because wave four cannot enter into wave one territory). In a zigzag, wave C is usually .618A, equal to A, or 1.618A . If it is .618 of A then that price is 1.4096. To equal A, the price would have to drop lower than 1.3862 which should not happen to preserve the Elliott count.
Euro touched a low of 1.4288 and now seems to be struggling to recover from there. If one examines a cloud chart (which I try to do as little as possible but as they become more popular it's worth glancing at them), Euro has descended down to the bottom of the cloud. However, since it entered from above, this is still bullish and supports the ABC correction theory.
However, there is another way to examine the price action from 1.1876 and that is as a large correction, made up of a double zigzag. I have marked the letters for this correction, a double zigzag, on the daily chart below and this fits in with weekly price action as well which is a big plus in my mind. If this is true, then there is a big drop ahead as we'd be in a third wave.
This just goes to show how loopy Elliott Wave can be if you attempt to use it as a trading tool. However, it can be evidence and it can indicate market psychology. The nice thing about either of these interpretations is that unless the 4th wave discussed above is complete, the most likely scenario is for additional moves down under either interpretation.
Looking at possible support, regardless of Elliott, when the price dipped to 1.3970, the 100-daily SMA held as support. Currently, the 100 is at 1.4143. That is very close to 50% of the move from 1.3429 to 1.4942 (1.4186) and .382 of the move from 1.2874 to 1.4942.
For resistance, the high today is 1.4404, just completed on the hourly chart. That was just above confluence but it was also a doji. Above that is 1.4450 and 1.4500. At that point, price would have regained the broken, short-term, hourly uptrend line.
Here's 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.
Wave 1: 1.1876 to 1.2467 (591)
Wave 2: 1.2467 to 1.2152 (315)
Wave 3: 1.2152 to 1.3335 (1,183)
Wave 4: 1.3335 to 1.2588 ((747)
Wave 5: 1.2588 to either 1.4159 (1,571 pips) at which point began an ABC correction or to 1.4274 (1,686 pips) which then initiated a correction down to 1.2874.
That meets the three inviolate rules of an impulsive wave—wave three is not the shortest wave; wave four does not poke into wave one's territory, and wave two doesn't retrace more than wave one. The purpose of an impulsive wave is to make forward progress and price did do so. The action from 1.2784, though, is less clear. Bulls might say that would be the beginning of wave three. However, if it was then:
Wave 1: 1.2874 to 1.3862 (988)
Wave 2: 1.3862 to 1.3429 (433)
Wave 3: 1.3429 to 1.4942 (1,513)
Wave 4: Either it completed at 1.3970 or it is still in process. If it is still in process, then B topped at 1.4697 and C can go no lower than 1.3862 (because wave four cannot enter into wave one territory). In a zigzag, wave C is usually .618A, equal to A, or 1.618A . If it is .618 of A then that price is 1.4096. To equal A, the price would have to drop lower than 1.3862 which should not happen to preserve the Elliott count.
Euro touched a low of 1.4288 and now seems to be struggling to recover from there. If one examines a cloud chart (which I try to do as little as possible but as they become more popular it's worth glancing at them), Euro has descended down to the bottom of the cloud. However, since it entered from above, this is still bullish and supports the ABC correction theory.
However, there is another way to examine the price action from 1.1876 and that is as a large correction, made up of a double zigzag. I have marked the letters for this correction, a double zigzag, on the daily chart below and this fits in with weekly price action as well which is a big plus in my mind. If this is true, then there is a big drop ahead as we'd be in a third wave.
This just goes to show how loopy Elliott Wave can be if you attempt to use it as a trading tool. However, it can be evidence and it can indicate market psychology. The nice thing about either of these interpretations is that unless the 4th wave discussed above is complete, the most likely scenario is for additional moves down under either interpretation.
Looking at possible support, regardless of Elliott, when the price dipped to 1.3970, the 100-daily SMA held as support. Currently, the 100 is at 1.4143. That is very close to 50% of the move from 1.3429 to 1.4942 (1.4186) and .382 of the move from 1.2874 to 1.4942.
For resistance, the high today is 1.4404, just completed on the hourly chart. That was just above confluence but it was also a doji. Above that is 1.4450 and 1.4500. At that point, price would have regained the broken, short-term, hourly uptrend line.
Here's the daily chart:
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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