EURUSD—weekly chart

Euro can't seem to decide upon a direction that suits it so it's in the kind of sideways action that traders can find so frustrating. As usual, when that happens, I like to back up and take a look at a longer-term view. What you see on the weekly chart is that first, the Euro has been trading in a narrow range, and second, it has been hammering out a bottom. So the sideways direction being seen in the shorter time frames is not surprising.

During the week of February 12, the high was 1.3841; the low last week was 1.3434. That has been a nice 407 pip range to trade, up or down but it looks as though it's narrowing, at least as of today, Tuesday. The 168 pip range that it has been in, so far this week, is a lot harder to trade. However, the pair isn't going to stay in this range forever so patience is the key word to keep in mind.

The descending triangle on the weekly chart makes one suspicious that price may break downward when it finally does break. The Euro is weak so that wouldn't be surprising. However, it has almost achieved the target from the length of the flagpole on the daily chart at 1.3376 so a period of consolidation is in order.

Should it continue to drop, the uptrend line from its 2008 lows is support at 1.2814. I have multiple calculated price targets from 1.2660 through 1.2733 but I think it will be difficult for it to get there. I'm still hoping for a correction up to possibly 1.3853 or 1.4039 before it does so as that will give it the energy to drop. The 1.3853 is near the high from February 12 I wrote about above.

At the moment, I'm waiting for a directional signal. One should come within the next day or so. There's a saying that an ounce of patience is worth a pound of brains.

Here's the weekly 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.