EURUSD—hovering

Yesterday, we actually did get some movement in the Euro. I ended up closing my long position from 1.3663 at 1.3598 for -65 pips. I took another long position at 1.3557 which now is stopped just above breakeven. On the hourly chart, you can see the Euro near the top of a small flag so 1.3609 is going to be resistance. If I wasn't long, I'd short here but the range of the flag is small and the pips aren't really worth closing my long position. Meanwhile, NFP comes out today so the pair may continue to hover.

Why take long positions if I believe the Euro is still weak? The main reason is that currencies don't go straight up or down and I believe we're in a correction. We've already concluded an Elliott Wave flat correction on the hourly chart and may be beginning the remainder (which would end up being a double). If this is a correct interpretation then there should be more upside, possibly returning to 1.3750 and perhaps to 1.3850 and 1.4039. I could, of course, wait until the pair gets to that point and try shorting. Both that and what I'm doing are valid approaches. The key message here is that you need to have an approach, one that you can justify to yourself. You also need risk management.

If, in fact, this is the end of the correction and it's getting ready to drop again, then I have my targets and I'll be ready to go short.

On a daily basis the pair closed below the 13 EMA yesterday.

Resistance is at 1.3610, 1.3685/97, 1.3736, 1.3839, and beyond to 1.4022 and 1.41. Support is at 1.3552, 1.3500, and 1.3435. Below that is tohu-bohu.

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.