moneyAfter a period of a busy trading, things have slowed down for me this week.
I started by entering in whole bunch of trades very early in the week, only to close them within a day or two with not much to follow.
Here is one, AUD-USD. Short on the open of the week, out on Monday, I think, about 20 pips gain. I didn’t follow with more trades later on.
I also had a virtually identical trade in NZD-USD.
Here is the reason for less trading. GBP-USD, after small gains early in the week I tried to short it again. This time however it didn’t sell off as before. I don’t know what it means but I need to wait for farther price development before some opinions are formed. While every cross has a life of it’s own, often an action in one is followed by others.
For now I’m in a waiting mode, hopefully not too long. I still trade every day but it’s more scalping and very small lots are involved.
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I’ve been going over longer term charts, as I periodically do. For some time now EUR-USD long term charts were drawing my attention. Like this one, the monthly chart. There is something here that’s extremely rare to spot, a MACD monthly divergence. The highs of both price and MACD are marked A and B for comparison.
The divergence is not yet confirmed, as the monthly bar for May is not completed. I also put Fibonacci levels, but retained only 50% , 100% and their multipliers. One thing about divergences is that they can’t tell you whether the possible pullback(if it happens) is a reversal or a pause in the underling trend.
Is it tradable? Well, probably not. Let’s say current bar closes down and confirms divergence. That would give us a target of about 1.2600 if a person thinks it’s only a break in up trend, or 1.1600 if one thinks this is a long term reversal. Even if this whole thing is correct, it will still likely take 8-15 bars to reach those levels. That’s a long time to wait. During this period there likely would be many conflicting events happening on daily and even weekly charts.
On top of that, no divergence is a guarantee of being right.
Due to rarity of this situation I decided to bring up and also it’s a good training in identifying these things. It’s very easy to see them after the fact but not that simple while they form.
Husar
