Profit Mongers EUR/USD Trading Update 12-13-2010

EUR/USD analysis (tipping point) Update Sunday 12-12-2010:

Right now the EUR/USD is coiled up pretty tightly after last week's rangebound action. We've sold off from the 1.3280-1.3380 sell range from last week (now 1.3197) and have worked into a wedge on the hourly chart. A break to the south of the blue line (see chart below) should see at least 50 pips lower to the pink channel line. A break of the pink would mean a very likely selloff to either the red support line, or the Nov 30 lows around 1.2970, whichever comes first. Conversely, the upside risk grows with a break above the purple channel resistance line shown.



Any short to medium term trades or tigher SL short EUR/USD trade ideas are probably best putting a SL either just above 1.3283, or a bit above the purple resistance line shown (now 1.3245). Yellow lines are alternate options for sloping resistance, but I like the purple line best, while dotted yellow lines are key fibonacci levels.

As for new trades, I'd consider selling short term near yellow or purple sloping channel resistance, or on a clear breakout of blue or pink channel support. Since I'm already plenty short though, I'm going to focus on taking partial profits on my current long term trade which I will do next a bit above the pink support line.

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