A look at the U.S. Dollar and EUR/USD to Start 2010

I was laying low for most of December, (as I see no point in unraveling a pretty decent year with too much year-end trading) but I was staying fairly active with my short term five minute set ups (which I have outlined in detailed perviously) and find myself ready to grab 2010 and see what it offers.

Everything I do in forex starts with my opinion of the U.S. Dollar. Here’s a look at my forex BFF, the U.S. Dollar Index:

U.S. Dollar Index Chart

There are a couple things that pop out to me on this chart. First is the 200 period SMA on the daily which is a big ceiling looking over the dollar’s rally. The market cycle is still up so pull backs are buying ops as long as that is still the case. The sideways movement through December is not anything that really concerns me since that price action in many ways reflects probably the lowest opinion and conviction of the year.

Let’s look at the EUR/USD next since that’s where the rubber meets the road for us forex traders.

EUR/USD chart

The cycle is a mark down on the daily with 200 period SMA support waiting at 1.4228. I am waiting on a pop to the 34ema low (currently at 1.4508) for a short trigger.

Even though I am looking at the end of day charts doesn’t mean that’s where my trading attention is at…intraday the EUR/USD is in a mark up cycle across the 15, 30, and 60 minute time frames and I’m watching the top near the 1.4450 psychological level to form a ceiling and send prices down for a correction which I will buy into as each time frame closes in on the 34ema high. As to which time frame to trade? Here’s the criteria I use. The market cycle has to justify the entry long so that means a 10-12 o’clock Wave angle. Right now that’s nearly eliminated the 15 minute as a possibility. The time frame itself will present differing risk levels since the “point of validity” is the 34ema low. Be sure to factor that inot your decision. Finally, if I can get a secondary support confirmation like a psych level or Fibo level, all the better.

Happy New Year to you all. I look forward to what 2010 will bring us!

the Queen 😉