On the three-hour chart a hammer formed yesterday at this low and it needs to hold if there's any chance of overtaking the high of 1.4282 that looks to some as though it was a bull trap. There's reason to believe it could rally. For example, on the three-hour chart, momentum (as represented by RSI) is skittering along the oversold line at 28 to 30. Of course this failure to plunge definitively below could be the stubbornness of those Euro bulls. There are some who will never give up. However, these lows held on Oct. 27th and a low just below at 1.3698 held on Oct. 19th.
One could risk a small long here with the stop below 1.3698 or down to 1.3627 depending on your risk tolerance. I think the latter a bit steep because if price goes below 1.3698, one could reasonably expect a revisit of 1.3335. If the pair does rally, 1.4070 is a good target to at least significantly tighten stops and take some profit. (see yesterday's blog). However longs need to be cautious. You can see on the three-hour chart how this could be construed as the formation of a 5-wave decline which would be bearish for the pair.
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.
No comments:
Post a Comment