I noted this morning how the FX indices charts are divergent on their 4hr and daily time frames and that this is a warning for FX traders of EUR and US$ based pairs. I just wanted to expand on that thought a bit in this post.
USDX daily Cloud: price is below the daily Cloud:
USDX 4hr Cloud: price is above the 4hr Cloud, hence, the divergence.
EURX daily Cloud: price is dipping into the daily Cloud:
EURX 4hr Cloud: price is below the 4hr Cloud, hence, the divergence for the time being. That is, until price drops below the daily Cloud:
I have noted elsewhere on my blog, found through this link, how FX Index divergence creates choppy trading conditions on the 4hr charts and often better conditions on the 30 min charts during the US session. The following 30 minute chart of the EUR/USD is further evidence towards this observation. The last two trading sessions have offered much better trading during the US session off the shorter time frame charts.
E/U 30 min:
I currently have a TC signal to short the E/U on the 4hr time frame but, given this divergence, I am wary of this for the time being.