EUR/USD

The EUR/USD had a nice run up earlier this week but it's not moving worth a sou right now. Where's the action? But this is what trading is all about--waiting for another move that will be definitive. Trading is nothing if not about patience and yet patience is the one trait many traders seem to lack. Actually, patience isn't the bon mot. It's too bland. Forebearance would be better--a determined struggle to not give in to negative feelings. How many times has someone bailed out of a trade after the pair waffled back and forth and then watched as it took off in whatever direction one was originally in? Or, getting into a trade, one starts to second guess oneself?

There are various ways to cope with this and I'll be getting into some of them over the weekend. For now, I thought I'd amuse myself by building a word cloud of some of the recent news about the Euro. Isn't that cute?

The first chart is my 3 hour/3 box P&F chart, based on close. It shows the uptrend, an engaging consolidation period, and the pair is now at a key resistance level. If it can break through....but I'm getting ahead of myself. Note the symmetry in time of the last moves up. It evokes the three-drive pattern from which one could expect a break down.

The last chart is the hourly updated from yesterday. One could still make the case for the broadening pattern but there is also the appearance of an upward wedge with its two upsloping lines and multiple touches. However, one could also argue for a pennant.

More important to me is that there has been selling that has come in several times when the pair has achieved this level (take a look at the 15-minute chart). So even in the face of the strong uptrend, I feel OK with my short with its teensy-weensy, yellow polka dotted stop. Remember, I will reverse myself if and when taken out, depending on what the market shows me.

Now I have to remind anyone reading this that these aren't trade recommendations. They're just my musings. All trading carries significant risks the lawyers tell us to say. And you know something? They're right. That's why I keep my stops small.

EUR/USD

Well here's the deal with this pair. It's been in an uptrend on the monthly, weekly, and daily charts (as well as on the 3 hour since early September after a consolidation period). With that kind of trending one wants to wait for a pullback to enter.

Had I been on top of things the last hour or so I might have gone long on the pullback on the hourly this morning to 1.4503 with the close at 1.4534. Especially since that was a nice little Fib retracement from the prior low at 1.4467. I wasn't. I didn't.

But there are some other interesting things going on in this pair. Look at the hourly chart above and notice the uptrend lines in both black and orange. Price dipped its teeny tiny toes below the orange line (baby, it's cold down there) and fell below the RSI orange uptrend line yesterday. (sorry, for the funky dates on my charts from Oanda. Today is the 10th but they show it as the 9th--this plays hell with any cycle work I'd be inclined to engage in, I can tell you. Or movements of the planets...oh well, let's save that topic).

The black uptrend line on price shows a divergence with the black downtrend line on RSI. So price going up and momentum is going down. Uh-oh.

The other chart shows a broadening formation on the hourly. I take these seriously. Taking something seriously doesn't mean I'd trade it in and of itself. But now I've got three rather bearish indicators on the EUR/USD hourly. If I look at the candle formations themselves I see a nice strong black candle three bars back and also some indecision with the candle shadows. But this is only the hourly so let's not get too, too carried away with the analysis or start hopping to conclusions. What I'd like to see next is another touch at the high of the broadening formation or a bit higher. Then I might try a short and I can use a fairly tight stop to get me out if price merrily continues past that point, assuming if it happens, that the trend is still very much in force.

Watch the price; watch the price; watch the price. Too many times we trade our expectations. "I'm bullish on the Euro; therefore it must continue up." Or "The Euro is over-valued given economic conditions in Eurozone; therefore it must go down." Uh-uh-uh. While expectations can help us make sense of situations in life--i.e. we can fill in a conversation if we miss a word or two or u cn rd a txt msg despite missing letters--it can cause traders to make stupid and foolish errors, i.e. "Me think bull so I'll ignore the bear signs," or "me big bear so even if it's going up the pair can't be bullish."

Don't trade your expectations.