Thursday, December 24, 2009
Euro/US Dollar Correcting Upward
The dollar's trend has changed to down for the short term. I attached the chart of the euro vs. the US dollar, which basically moves opposite the to the US Dollar Index. The EUR/USD is sporting a clear 5 wave rally. Most likely it's a wave A in at least an A-B-C correction. I'm waiting for it to reach the 1.4540 - 1.4700 range I mentioned yesterday before I start shorting the EUR/USD. But, because the rally off 1.4216 is in 5 waves, it cannot be a "flat correction", therefore if the pair breaks below 1.4216 then that would hint that the downtrend in the EUR/USD has continued and that it should fall much further. So currently I have a "sell stop" order placed at 1.4210 so I can catch a collapse if it occurs. Aggressive traders can look to go long the EUR/USD right now with a stop below 1.4216, however I don't recommend that. The EUR/USD downtrend is too strong to play against it in my view. I'm merely looking for opportunities to get long the US dollar by buying the USD/CHF and shorting the EUR/USD, AUD/USD and GBP/USD.
In summary, I currently have a "sell stop" order on the EUR/USD at 1.4210, but will remove that order and start getting short the EUR/USD immediately once it enters my resistance range of 1.4540 - 1.4700.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.