Thursday, June 30, 2011

EURUSD—mixed signals

Euro managed to break above key resistance at 1.4450, reaching a high of 1.4521. Price is stumbling a bit now. The most bullish case is that there is an Elliott triangle forming. If one assumes that point D was 1.4521, then there should be a move down, possibly to 1.4141 (although sometimes price falls short of E before thrusting out of the triangle) and then new highs. That scenario ties in with a butterfly pattern that may be forming where the end of the butterfly would be around 1.52. Continuing this bullish fantasy, this would mean we were ready to pull out of wave four for a fifth wave move (wave one starting at 1.1876). A potential target, using the golden section, would be 1.5264. Hmm. Pretty close to the butterfly target. Supporting this bullish heresy would be the point I made the other day—RSI isn't dropping significantly on the daily chart, even when Euro finds new lows.

If one looks at price action from the perspective of an ABC correction off the top of 1.4942, wave C would have been .618 of wave A at 1.4096. The low was 1.4074 before price began moving up.

Forgetting the Elliott interpretation, there is a symmetrical triangle. These can be a continuation move but can also signal a potential reversal. Price is above the 50-, 100-, and 200-SMA on the daily charts.

Finally, on the four-hour chart, one might say a double bottom formed at 1.4074 and 1.4103 with it confirmed at 1.4442. The target for this is about 1.4784. This target takes it above the 1.4697, a number important to Elliott bears.

Whatever else one can say about the upward price move from yesterday, it took out a number of stops from short sellers. The market loves to do that but I consider it a warning for higher prices.

Looking at the downside from an Elliott perspective, one can maintain that wave two peaked at 1.4697. Price is at the beginning of wave three and although one would prefer less upward price action, as long as price stays below 1.4697, one can maintain this interpretation. One can dismiss the alternate bullish triangle by saying the ratios between the legs are not quite right. If this is true, the targets are attractive

I'm leaning less bearish than I was because I'm not seeing a relationship between price and momentum on the hourly chart. I blogged about this on June 22. RSI drops below 70 but price does not move down much. Still, the pair is at resistance and then next resistance is 1.4550/1.4600 so behavior there may tell the story.

There is short-term support at 1.4450/42, 1.4328 and 1.4238. The latter two look as though it is a transposition of numbers but it is actually the June 29 and June 28 low respectively.

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.

Wednesday, June 29, 2011

EURUSD—Time to fish or cut bait

After a thwarted attempt to get above 1.4442 yesterday, Euro has been hanging about just below the key 1.4450 level since early this morning. If it manages to break through, look for a move to 1.4600 then 1.4697. Above that would negate a bearish case for the most part. If it breaks below 1.4103, this would confirm a double top.

© 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 28, 2011

EURUSD—short-term momentum

Euro has pushed up to 1.4370 with good momentum on the short-term charts. If it easily takes out 1.4385 and the psychological 1.44, the key resistance of 1.4428/50 will be the next target.

© 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—wavering

The bears certainly expected Euro to begin its plunge by now, especially those who believe price is within a third wave down. The bulls would like to see it scoot up and take out 1.4442 (June 22 high) and then the 1.4697 prior high. Both sides are bound to be somewhat frustrated as it plays its small moves with no definitive action.

Those who went short in the 1.42 area are probably approaching stops. This may fuel some additional price rise. However, logical resistance is the 1.4385 confluence area, 1.4378 (weekly pivot R1 calculation) and 1.4428/50 which is key resistance.

On both a weekly and daily basis, there is a bearish bias. However, RSI lows on the daily chart are not as low as one would expect to see if the bears had true control. The daily uptrend line (since January), broken with the June 16, 1.4074 low, has been serving as a magnet line for price.

On my three-hour point and figure chart, Euro is caught in a symmetrical triangle with small columns of X and O. This only means that supply and demand are approximately equal. Underlying this, though, is the real question of whether accumulation or distribution is taking place. There needs to be a definitive move one way or the other to answer this question.

I may try a short in the 1.4340/85 area. I'll post a chart when there is a more definitive move.


© 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 27, 2011

Friday close, pivot, SMA

For each of the following nine pairs, I've listed the Friday close, the annual pivot points, the 200- and 100-SMA, and the close for 31 Dec. 2010. I look at a series of comparisons such as this every week. While I don't care so much where a market has been as where it is going, some items pop out when you compare various parameters.

First, all pairs except for USD led pairs (USDCAD, USDCHF, and USDCHF) are above their 2010 year-end close. This is generally positive. However, if one considers the highs for the year for each pair, all pairs that are above their 2010 close are below their highs for the year. Of the three below their 2010 close, the USDCAD and USDJPY are above their lows.

Five pairs are below their annual pivot points. In addition to the USD-led pairs mentioned above, both EURJPY and GBPJPY are below.

Four pairs are above their daily 200-SMA. These are AUDUSD, EURGBP, EURJPY (barely), and EURUSD. When price is below a 200-day SMA, it is often bearish. Three pairs are above their daily 100-SMA, AUDUSD, EURGBP, and USDCAD. Surprising about the latter—it is worth watching to see if it maintains that and the 100 serves as support.

I also watch the 50-daily SMA and I am always interested when there is a 50 crossing the 100 or 200, particularly if it occurs in conjunction with a pattern.

Nothing here is definitive unless used in conjunction with other analysis. It is just something to think about.












© 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.