11/28/08 11:22 am - EURUSD: Key support at 1.2565

This weeks bullish move lost momentum yesterday, and 1.2958 proved to be strong resistance as expected. I failed to follow my own plan to exit my long on either one of those failures, and too much turkey had something to do with it. :0 Took an avoidable loss of 165 points on this trade as as result. As a general rule, I always rather exit a trade ahead or near key resistance, and re-enter later on a clear break (20+ points) of this level. It is always better to miss out on a profitable trade, than stay in a losing one.

The sharp down-move in European trading last night has the potential to leave a very bullish pattern on the daily charts, if a bounce ahead of 1.2565 occurs. If that level is broken, however, we will likely see a resumption of the downtrend.

My fundamental long term view is still clearly bearish on the dollar, and becoming more so with every new bailout. The Euro should benefit from what I see as an unavoidable inflationary pressure, and I’m looking for the current deflationary period to end soon.

Will reset my long on a bounce at or ahead of 1.2565, with 1.3297, the key Fibo resistance my target once again.

Support: 1.2673 Fibo38    1.2565 HSpptRsst    1.2422 L-11-20

Resistance: 1.2802 HSpptRsst    1.2958 HSpptRsst    1.3080 HRsst

RSI: Hrly: in a bearish channel, Dly: near up TL

Hourly Chart:

Daily Chart: