EURUSD—weaker

It appears as though 1.44 is a struggle for the Euro. The high was 1.4336 in the last hourly candle. Euro then dropped to a low of 1.4212, breaking below what may in fact be a bear flag on the daily chart. Target of the flag is a heart-stopping 1.3350. That is a bit far away to get excited about, especially since there are significant support levels before that. The nearest one is a strong confluence zone at 1.4169/28. Additional support is at the May 16 low is 1.4067, then 1.3890, the .382 retracement of the move up from 1.2874.

If the pair is going to rally, it needs to overtake 1.44. However, the first target to get excited about is the channel from the beginning of the year at 1.4671.

Yesterday I went long at 1.4237 and was stopped out at +40 pips—another insignificant trade. As I blogged yesterday, where does one decide to get back in? Since the pair is now throwing off signals that it is weakening, I will most likely look for short entries. The lower boundary of the bear flag at 1.4246 is one possibility but I will be keeping an eye on momentum. If the pair breaks 1.4200, that is another sign of weakness.

Here is the daily chart:

© Dianne Fecteau, 2011. 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.