Tues 31 July - EUR

As per GU all the RSI's are above the 50 level. 1hr higher high higher low cycle did get broken however. Daily has a lower wick, there are fibs on 4hr for move up and and 1hr for move down that could both apply.There is an upper trend line and resistance level that could come into play around 1.2350 (not suggesting we'll get there).

Ralph Shells COT report (see link top right) shows big dogs reduced their massively short EUR position a little. A move down, even if jittery, might be needed to help them offload more.

As per GU could go either way today.

Tues 31 July - GU

A not totally unexpected move down. Choose to sell GU and not EUR and got stopped out in GU chop.

GU - D, 4hr, 1hr RSI above 50 level. 1hr higher low higher high flow still on, for now, we'll see if that fails during the course of the day. We are at the previous resistance level from 2 July and there is D divergence showing.

Could go either way today.

Aug trading EUR 4hr charts 2011, 2010

A similar picture for EUR. On the 2010 chart I've highlighted the higher lows and the lower highs with arrows up and down. From what I can see all but one worked out. The lower high and higher low after divergence worked out.

As mentioned on the GU Aug post, follow your trading plan, you might want to be a little more conservative on taking profits. The same trading basics apply however as these charts clearly show.

Aug trading GU 4hr charts 2011, 2010

Often there is a discussion about trading in August. These are the 4hr charts for 2010 and 2011. They show decent enough ranges and as is fairly typical of any time of year 2 decent moves a week.

The red lines are the current support/resistance lines that I have on my charts right now, 2012. Some of them seem to apply back. Coincidence or not trading basics do not go out of the window in August. The charts show support/resistance levels apply, the flow of funds i.e. higher highs/higher lows, lower highs/lower lows works.  

Stick to your trading plans. With the EUR zone mess at the moment it may be even more important, although the world has been a mess for the last 2 years also.

EUR Mon 30 July

EUR D chart RSI is above 50 with a large body doji at a resistance level. D chart has not been able to break the upper trend line/50 sma as yet. 4hr showing divergence with a negative close. 1hr flow still on higher highs and higher lows, divergence showing again.

The COT data is still reflecting the big boys massively short, their positions were not reduced in the last week.

So we can go either way on Monday, would not be surprised to see US session lead the way. Would like to see 1hr flow flip over to lower high to confirm move down.

GU Mon 30 July

GU - We had a positive close on Fri after the massive move on Thur, heading up to the June high resistance level at 1.5777. All time frames are above their 50 RSI levels.

Against that we seem to be showing divergence on D, 4hr and 1hr, the 'potential' divergence would need price action i.e. good candles to confirm. 1hr flow is higher highs and higher lows. 4hr upper wicks at the highs is reflected in the struggle evident on 1hr chart.

Could go either way on Monday. As usual will be waiting for good candle set ups on 1hr. Would not be surprised at all for US session to provide the move with an intra day higher low or lower high.

EUR 27 July summary

I was asked to comment on EUR's pa on Friday. A trip to the doctor meant no trading in the morning and due to the potential for unforseen jumps if there was more ECB talk decided to leave the US session.

I said in the morning post "At the moment GU and EUR stopped at previous R levels. My methods would normally say today should be a buy day, possible sells due to the R level (and the reason for the move up)."

EUR 1hr had a small shooting star then an engulfing negative close in and around London open. So the potential was for a counter trend sell. Not that I'm saying we would have taken it as D chart was above RSI 50 level with a very strong close on 26th, 4hr was sideways RSI above 50 level.

5 min chart, the blue box shows pa moving above and below the round number. I could not give advice on trading this, I'm not good enough to figure this kind of move on a consistent basis (no 2b, lower high, double top).

The red line left, shows the close of the 1hr shooting star. red line right the close of the engulfing negative candle. The arrows down show potentially 4 lower highs. I thought the 2nd arrow from the right, was the clearest lower high around 11.40 and 1.2265, coming after the 1hr negative close that broke the immediate range. The lower high shown by the arrow on right should probably be avoided IF it was your first trade of the day. Price had moved some 70 odd pips by then counter trend.

When price turned and moved up there were some nice higher lows but the 1hr candles setting them up were not very clean (green body shooting star, red body shooting star) so I really cannot say if they would have been traded. Might have been a frustrating afternoon.

ECB talk market up sharply

The ECB head talked the market up again yesterday. Anything can happen today up or down. The big boys have very deep pockets though and 200 pips (and more) doesn't faze them.

At the moment GU and EUR stopped at previous R levels. My methods would normally say today should be a buy day, possible sells due to the R level (and the reason for the move up).

At least the system should have caught the move on GU (but not in front of the computer at the time). GU was a possible buy yesterday with the doji on the support level, 1hr had an engulfing close arrow up, 5 min a higher low above the round number.

"Draghi Comments Buoy The Euro and Equity Markets" - Ralph Shell posted an interesting article on the ECB heads announcements, go to the link on the right and to the articles tab, well worth a read.

Oh yes sorry for posting a EUR W chart yesterday and talking as if it was the D.

EUR 26 July

EUR D chart showing a hammer, however the RSI is flat below 50 level it has not crossed above its ma, price could not cross above the 8 lwma. 4hr chart, with the news the divergence and crossing of RSI above its ma a move up followed through. 1hr late US session didn't have the volume to push above the US open highs around 2170, no surprise there.

Can be buys or sells today.

With COT data showing the big boys still heavily short  there may be potential for a squeeze up, we'll see. Would expect down trend to continue at some stage on good candles and perhaps an intra day lower high should that play out.

GU 26 July - intra day lower high

Yesterday closed with a doji, again showing the support at this level. The intra day lower high did provide an opportunity to sell as per the trade in previous post below. D, 4hr and 1hr RSI's all below their 50 levels.

For today, the 1hr lower high lower low flow is still in tact for downtrend but a lot less convincing than previously.

A buy or sell day due to the indecision, main bias still down.

Ralph Shell COT update.

See the link top right for Ralph's latest report.

EUR push up - politicians talking, GU early US fake out

Some market talk caused some quick jumps up in the eur this am. The divergence did indeed play out. As things stand the move above Y's high seems to be failing, we'll see how we close this evening.

Mrs V was watching GU and waited for the pre/early US fake out to settle down and sold for a 29 pip run down to the days low/M1.

EUR 25 July - smaller bounce key level failed

EUR hit 2075 yesterday US session and had a smaller bounce up than 23rd, see 1hr chart arrow down. When it followed with an intra day lower high this level failed. The weak pre/early US session green doji failed to go up. 

Divergences appearing on 4hr and previously on 1hr 23rd but view is we are still on downtrend. The lower high lower low cycle on 1hr is still in tact.

Several things we talk about showed in the charts:

•  smaller bounce from a key level = level likely to fail
• ignore weak pre/early US candles
• intra day higher low/lower high (in this case the latter) a decent signal

GU 25 July - smaller bounce key level?

GU stopped at 5500 on 23rd July with a large negative close candle, followed up yesterday with a shooting star that could not go lower. The failure of a good candle to go lower should raise some questions. Obviously 5500 is a key level, I'd also suggest the lower bounce from this level this time does suggest it may fail and go lower.

Potential to go either way today, should a move up fail below 5550 then I'd suggest the 5500 level will fail.

EUR GU 24 July - edit 8.30 gmt 24th

D charts - EUR has shown possible reversal bar, doji. RSI still below 50 level and we are below the 8 lwma (but thats also partly due to the strong moves down over a short period). GU a strong negative close on the possible resistance level 5500.

4hr charts - not shown but RSI's have crossed their sma's up, but still below the 50 level.

1hr - GU had a higher low in Asian session. EUR shows divergence and moved up after a lower wick candle followed up with a doji. Price moved up to 2150 area to close the gap from Sunday evenings open.

So there is the possibility of buys today, in view of the D have to view this as a rally in downtrend and be looking for chances to sell on any 1hr rejection of move up.

GU sell, US fake out avoided

As detailed in previous post we had the view that GU was a sell today.

This view made it easy to avoid a losing trade, we left the positive close candle pre/early US session as a counter trend fake out, often discussed here.

1hr turned neg again. 5 min lower high below 25 psych level, little/no lower wick. Ran straight down to the round number for +22.

Not in front of the computer this morning.

View 23 July EUR

The weekly chart shows a key support level from June 2010 around 1900. With Fri's engulfing lower high negative close just looking again for downside. The 1hr lower high lower low downtrend flow back. Any move up just a rally in downtrend looking to sell any 1hr set ups back into D trend.

View for Mon 23 July GU

An engulfing negative close last Fri suggests downside to come. 4hr lower trend line broken. 1hr higher low higher high uptrend cycle appears to have been broken.

Whilst the back of the 4hr TL may get tested (say 5660-80) as mentioned would expect more downside to come.

Divergence differing time frames - review

Divergence on a bigger time frame, D or 4hr, is a great way to get an early warning of a potential counter trend move. When pa confirms the divergence with a good candle set up (such as a hammer or engulfing close), or you get a signal from indicators you have tested (RSI cross of its ma, RSI cross of 50 level, move through 8 lwma) a decent move will generally follow. Thats good use of counter trend divergence.

From 4th July its reasonable to say the downtrend on EUR continued, D chart lower high negative close through the 8 lwma, RSI cross below 50 level. Here the 1hr divergences shown are back into the D trend. A much lower risk than trading 1hr divergence counter to the D trend.