EURUSD—coiling

Are these dull markets or what? My long position from 1.3587 is up 66 pips (as of 4:35 AM EST) and is profit stopped but it's a slow grind for Euro. After it completes its coiling inside the triangle you can see on the one- and three-hour charts there will be some movement. Triangles are often continuation patterns. If you ascribe to Elliott Wave (EW) theory, this most likely signals the end of the correction before Euro resumes its downward move, probably to 1.30 or so.

Since the November high of 1.5144, Euro has had very shallow corrections. The first one was over the course of 15 trading days in December to January and was only for 246 pips (1.4217 to 1.4463). This one, if it is indeed nearing an end, covered only 1.3435 to 1.3736 or 301 pips with today being the 15th trading day. That throws a wrench in the EW theory of alternation since that states that if wave two is deep, wave four will be shallow or vice versa. Elliott believed it "was virtually a law of markets." Elliott Wave Principle: Key To Market Behavior

Support is at 1.3551, 1.3531, 1.3435 and 1.3250. Resistance is at 1.3657/80, 1.3736, 1.3788/97, 1.3839, and 1.4026.

Here's the 3-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.