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According to trendline analysis, the trend on the daily chart for both the euro and the pound is up. That’s good for position traders. From a day trading perspective, the one constant remains trading the news. Two of our members have documented systems to trade the news - MMTS and KTTN. More often than not, they have proven effective in catching the aftermath of news coming out at 8:30 am ET. This is something you may wish to specialize in.

The other thing you may wish to focus on are the opening and closing times for the various markets - watching for swing trades. Today’s price action for the two pairs was rather anemic at the London open - the euro just meandering sideways, and the pound getting some oomph well after the London open. It really does pay to study both currencies, as you will catch movement on one that you won’t on the other, albeit they usually move in tandem. But, the subtle differences in their behavior are worth being aware of.

The trend on the daily chart for the euro is still UP, as a common sense demand (read, support) trendline is being respected at that level. Yesterday, in the am review, I indicated that price on the 15 minute was bucking the trend I was reading into MACD on the hourly, and that we should expect divergence. Well, that happened, as what you see on the hourly rules.

Price then went into a period of sideways action (read, consolidation or equilibrium - i.e., traders trading wood). By watching the euro and pound side by each, a downtrend continuation pattern was expected to unfold - and it did quite nicely for the pound. The euro, on the other hand, decided to test its expected high for today (M3), before following the pound in like kind. That’s the advantage of watching the ‘three musketeers’ in unison. By observing price action on the 5 minute for the euro, it was pretty easy to see what was going on, by observing the behavior of the 10 and 80 EMAs.

The trend is still up on the daily chart for the euro, further bolstered by the commercials’ COT sentiment (read, bullish) on the pound. The ~1880 level seems to find support at all chart levels. Certain key times of the day (read, London close, Tokyo open, etc.) continue to offer good swing trades, from a day trading perspective. Of course, position traders will pay more attention to the COT data, which comes out at 3:30 pm ET every Friday at the site I reference in my course. Coming into today’s session, price ‘knocked for the third time’ just shy of the ~1930 level - at M3 (the expected high for the day), read, M1/M3 day. A trendline break, just after the London open, supported by good angle and separation on MACD, facilitated a continuation of the swoon in price, which saw a reversal in the form of a hammer at the S2 pivot support level - just below the expected low (M1).

In the grander scheme of things, the euro is hanging in there - being supported by the 144 EMA on the daily chart - and MACD is bullish at that level. Negative divergence on the hourly saw price collapse to 2036 on the 15 minute, before recovering at London open - then “reading” for M3 on an M1/M3 day - coming in almost precisely at the price projection performed just before the London open. A nice 40-pip run up. No particular news that I am aware of that is propping up the euro. it seems to be gaining strength on the back of a whole raft of negatives coming out on the U.S. dollar, not to mention the posture of the dumb money, who have a bid on the euro - thanks to the big dogs setting them up.

Two things to be said about the euro today: If you look closely at the daily chart, you will notice what appears to be a channel in an uptrend – which is normally bullish. Secondly, on the 15 minute, we had a channel in a downtrend on the pound towards the end of the Asian session, which was bearish, and manifested itself in downward price action for that currency pair, as well as the euro. Both pairs usually move in tandem, except in cases of extraordinary news affecting one versus the other. So, by seeing that formation on the GBP/USD, it was fairly logical to conclude that the euro would break down too.