EURUSD—at a tipping point

Clearly, the Euro didn’t move back to the top of the channel I described yesterday. My long trade stopped out for -30 pips. Because I was busy, I didn’t stop and reverse although that would have made sense in retrospect. The clue was the break below the channel line and then a retest of that line before it began to fall. Trading takes attention and if you can’t offer that, you can’t really trade. This happens.

Now it has tipped below the .618 retracement line of the November to June drop which is not great news. It looks as though it’s making a feeble attempt to retest that line. Any failure is a good place to short. The next supports are at 1.3858, 1.3822 and 1.3698 (Oct. 15th low). Since October 7th there have been three highs—one at 1.4029; one at 1.4159; and finally yesterday’s, 1.4080. This is a potential triple top pattern that would be confirmed below 1.3698. The price target would be 1.3237. I think a more realistic price target is 1.3550 or 1.3512 (the 50% retracement of November to June). Below this is 1.3335. This would complete an overdue correction.

If the Euro manages to rally, the bulls need a clean close above that .618 line at 1.3895 and need to retake the channel line at 1.4008. Then Euro needs to quit its dithering and overcome resistance at 1.4080 and 1.4159. Only then will newer highs look possible.

Here's the hourly 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.