Update to EURAUD post, and why EURAUD may drain your psychological capital.

Last week I took a view that the EURAUD maybe basing. - Whilst I still hold that view long-term I have decided that right now I do not want to be part of it. I will explain below with the help of some charts and a little bit of trading psychology.

Having revisited the EURAUD pair, I have identified what may be a diamond pattern - See below :

Over the years I have come across many diamond patterns across many different times-frames, in my opinion they are one of the most awkward patterns to trade. Whilst I still think basing is probably occurring in the longer-term view, I would rather wait for a clear confirmation, than try and anticipate it.  Admittedly on occasion diamonds do behave well, in my experience however they are mostly like naughty children, they never do want you want, are very erratic and temperamental and will often ask of you - 'are we there yet?'... --- In other words, whilst they are forming and growing up, they will drive you mental, test your patience and exasperate your mental energy and psychological and real capital. In the meantime - whilst waiting for this to happen - other opportunities could go begging. And remember, if this does start to advance, then there will be plenty of time to get on a trend, with far better risk/reward set-ups.

I have below illustrated an example of a large-scale diamond formed at the top of the US equity market 1999-2000, I remember that whilst this formed that there was a lot of hair pulling-out going on.