EURGBP—possible correction?

Yesterday was what was known as an inside day. This means that the trading range was smaller than that of the prior day. The day before yesterday (Monday) the low was .8969 and the high was .9150. Yesterday, the low was .9018 and the high was .9102. This means the pair moved 181 pips on Monday and only 84 on Tuesday, so it hints that momentum is dropping. You need momentum to keep prices moving up. Therefore, the pair may be in for a correction, even though I originally calculated a profit target for this pair of .9180. There's negative divergence on the three-hour chart.

The high today, as of 7:14 AM EST, is .9100. I've moved my stop to .9015 for the long position I entered last week at .8760.

Resistance is at .9100, .9150, .9240, and .9412. Support is at .9018, .9000, .8969, .8890/85 and .8708.

Here's the three-hour chart:



















© Dianne Fecteau, 2010. 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.