Running In Circles

If you have a feeling that markets across the board are running in circles recently then you’re certainly not alone. My personal psychology meter is approaching exhaustion territory and that’s a good thing. I enjoy using myself as the ultimate contrarian indicator and whenever I feel like throwing up my hands in disgust that’s when the best setups start popping out of the woodwork.

So it’s not that human emotions should be ignored altogether. It takes practice and teutonic discipline but you can use them to your advantage. Whenever you feel very strongly about a situation then ask yourself how your fellow traders may feel – which is a lot easier to do in the days of blogs and social media. And given a prevalent sentiment what course of action may be the most prudent? What would Jesse Livermore do? And would he bother putting up a Facebook page? 😉

Right now my personal feelings tell me to stay the heck out of equities as the recent gyrations have been a royal pain in this rat’s rectum. But to yield to personal sentiment would be foolish. Nothing has changed – my stop is still in place and until it is touched I must keep holding long.

However, I need to point out that this long setup needs to produce 1R by the end of its third candle and if I don’t see a strong bounce overnight then I will be forced to take it off the table. This is a rule which is part of CrazyIvan right now and it often keeps us out of trouble – of course sometimes it also causes you to miss an ensuing run higher. Since this is a discretionary trade and given the context today I think we should allow it one more session but if it doesn’t take off by tomorrow I will be scaling out, for better or for worse.

I trust by now you are aware of this morning’s ECB interest rate decision and the ensuing drop in the EUR/USD. I did quickly point out that it may enjoy possible support near the 100-day and 25-week SMA and thus far it’s been doing just that (much to my chagrin – this expat would love to see it fall off the plate for personal reasons).

I don’t advertise it much but here’s a snapshot of today’s ZeroFX indicator running against the EUR/USD – very nice signals there. What may not be apparent is the clear divergence ahead of the rate decision. In case you’re interested – the ZeroFX is part of the Zero subscription package.

But we have setups to attend to – please step into my Mediterranean lair:

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Cheers,