UPDATE: 8-25-2010
I am still short on the EUR/USD as it still appears to be a bearish trending market as of this writing. Here are two more pics of my graphs. This first pic shows that a bearish engulphing candlestick has formed on the 4 hr chart and our moving averages are still far enough apart to indicate the bearish momentum is still decent.
Also lets see what forms of support might account for this period of consolidation that we are in. The answer is once again a fib level my friends. Here’s my daily chart where you will see that we are right around the 50 fib level from the recent May to August rally.
So I would watch today’s price action real close to see if the current 1.2720/1.2600 range is broken and use that to predict the next direction of this pair. If we can close above 1.2690/1.2700 at the end of the NY session, then I’d say we might see a reversal of the trend, but if not I would say we are headed lower, perhaps the lower 1.2400′s right around the 61.8 fib level on the daily chart.
To learn more about these indicators, follow these links: Fibonacci Made Easy, Moving Averages, The Alligator
Hi, Thanks for the update.
So at this point it looks like you will stay in the trade because there is still good separation between the blue and red ma. Or is there something that tells you that it’s time to get out?
Peter
That’s a great question. There are several other factors that I don’t have in the chart i posted. The weekly S1 came into play, as well as the 50 fib level illustrated above, which is what I think accounts for today’s consolidation period. But my indicators tell me we aren’t at a reversal point quite yet, so I think we are headed lower.