Firstly, happy Independence Day to all Americans.

Last week we saw a violent rally in currencies and global indices. This kind of thing always happens before a holiday weekend in the US and I should have seen it coming. Hence, my short trade on Eur/Usd didn’t go as planned and I got stopped out for -150 pips.

It’s not that important that the trade went wrong, as long as I kept to my stop order as I set out last week. Even the best trader or analyst will make wrong calls at times, but the only difference between someone who does this for a living and someone who goes broke is discipline. Never let a single trade cost you more than 5% of your account. If you’re a good analyst and trader, you will win more than you lose.

U.S. Markets are closed today for Independence Day, and I just wanted to give a quick update on the Eur Usd.

From the 4 hour chart above I just want to point out a similar negative divergence in the RSI as with the last big decline.
Eur/Usd is under a descending trend line and it has the negative divergence, so my bet is that it’ll head lower early this week.

I’m not too sure what will happen later in the week though, with the Europe situation, Greece bailout, multiple countries being downgraded and defaulting.

For now I’d just be very careful trading this currency, and I’m still inclined to short it, but will do so with very short stops.
(Maybe a short around here at 1.45 with a stop at 1.46 or so.)