I wanted to give an update why I didn’t bail on my EURUSD long yesterday/this morning. First I got in near the lows, so i have room for error on my swing trade. I also was anticipating resistance on the green dashed neckline that the bears are hyper focused upon. This is why there are near record shorts on this currency pair as per COT (and they probably added this week through Wed, due out Friday). It isn’t enough for me to sell due to this first test of key resistance.
The first time you hit these support/resistance rails you can bet there is going to be a pullback. That’s the way S/R levels work. I have a much more longer term mindset then most traders. I don’t get in a currency swing pair unless I can get at least 500pips and hopefully 1,000 or more.
You will notice at the bottom of each chart I have highlighted where the Relative Momentum Index was trading this morning. Weekly — it’s clear there is a lot more room before it’s close to overbought. 4hr chart: it was at a bombed out 7 on a scale of 0-100 (big buy signal) and the hourly was under 5. All three time scales were on buy signals. This is not area that you sell long positions. Doesn’t mean this trade will be blue skies ahead, but not a reason either to panic out of a working swing trade.
Hope this tip helps some of you in the future.
Regards,
Rick
P.S. the commerical big banks have cast a large net on the EURUSD shorts taking the other side of the trade or many months. Big hedge fund tunas are trapped in their net: http://bit.ly/x37JfD Sushi time cometh!
