EURUSD—trying to rally

Euro fell to a low of 1.3892 this morning, taking out the remainder of my long position on the way for +100 pips. It's trying a rally from here which is almost right on the .618 retracement of the move from 1.5144 down to 1.1877. This is also the area of where an extended top line of the former daily triangle top line would be as well as fib confluence—in other words, it should provide support.

Looking at the weekly chart, one can see that the last few candles have been less than bullish with their upper shadows and fairly small bodies. However it's within a channel and so far it's higher lows. Below 1.3790 would signal trouble and suggest further moves down can be expected, perhaps to 1.3698, 1.3665, 1.3560, 1.3500 and the former resistance level of 1.3335. We'll have to wait and see but my money is on a rally, at least in the near-term and on the shorter-term charts. However any longs would want a tight stop below this morning's low. A move down to 1.3790 would suggest going long since the risk would be contained by a tight stop.

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.