This pair is interesting simply because despite the Euro's woes, it doesn't seem to want to collapse against the British pound. I've been long but bailed out yesterday at +77 pips because of it nearing the .382 retracement of the move from .8941 to .8335 and because of the holidays.
On the weekly chart, there was an outside candle last week with a range from .8345 to .8556 (8566 is the .382 retracement). The low in November was .8340; in December, to date, it has been .8334. The pair is trying to base and trying to overcome that initial resistance of .8566. Beyond that is resistance at .8595 and .8638 (the 50% retracement of 8941 to 8335 and just above the 50% retracement of 9150 to 8068). The 10- and 20-EMA on the weekly chart are within pips of each other at .8515/19 and the monthly 10- and 20-EMA are identical at .8532. Clearly, this current price zone is significant resistance. Failure is probable but what will be more intriguing is if it doesn't fail. That would signal potential gains to .8759 and .8941. However I'd expect middling trading until after the start of the new year.
© 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.
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