EURUSD—bulls have their fingers crossed

I have one long position open from 1.2413.

The pair has climbed nicely but is struggling at 1.2688 (it touched it last evening and again this morning). There are some headwinds here but there's no real reason (yet) to think it won't get through it with a little back and fill. If so, a C wave corresponding in length to wave A would take the pair to 1.2743. Besides the collective wish of the Euro bulls, is there any other evidence for a target near here? Yes, a weekly trend line is coming at around 1.2755. In addition, 50% of the move down from 1.3692 to 1.1892 is 1.2792.

There's also an ending diagonal in the larger upward correction on the three-hour chart which implies caution from an Elliott Wave perspective. Or you could see it as a wedge (both trend lines heading in the same direction). Wedges can be consolidation patterns within the trend which means higher prices but they can also be topping patterns. As usual, one pattern does not a conclusion make.

However, if Euro gets into the 1.27 area (as it's is now), begins faltering and RSI should move and then fall from over seventy on the hourly chart one can think about shorting. RSI still has a ways to go on the hourly chart to climb above 70 so it may continue up. Should Euro easily clear the 1.27 range, then I'll be adding to longs.

Resistance is at 1.2688, 1.2743/55, and 1.2800. Support is at 1.2558, 1.2480, 1.2435, 1.2409, and 1.2350.

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.