Spain and France Discover Charts Don't Care About Elections

The euro dropped to a 17-month low because Spain and France have political problems. Retail traders are now convinced this matters for their technical setups. It does not.

Political uncertainty is the financial media's favorite phrase for "something happened but we have no idea what it means for price action." Two of the euro area's biggest economies are experiencing fiscal concerns. The euro fell. These two facts occurred near each other in time. Causation is now assumed by people who cannot read a candlestick chart.

Here's what actually happened: the euro was going to hit a 17-month low anyway because the chart said so three weeks ago. Then some politicians in Madrid and Paris did whatever politicians do, which is talk and accomplish nothing, and now CNBC has a narrative to attach to a move that was already baked into the 200-day moving average.

Every swing trader in Brooklyn just panic-sold their EUR/USD position at the worst possible entry because they read "political uncertainty" and thought it meant something. It meant nothing. The support level at 1.0350 has been visible since July. You could have set an alert. You did not set an alert. You were too busy reading headlines about fiscal concerns.

The funniest part is watching currency traders pretend they understand European politics. You do not understand European politics. You do not understand American politics. You barely understand the difference between a limit order and a market order. But sure, Spain's coalition drama is definitely the reason you blew up your account today and not the fact that you bought at resistance like an idiot.

The chart does not read the news. The chart does not care about France's budget negotiations. The chart was already headed lower while you were Googling "what is fiscal policy" and getting your information from a website that also sells essential oils.

The euro will do whatever it was going to do regardless of which Spanish minister says what to which French bureaucrat, and your stop loss will get hit either way.

Photo by Calvin Hanson on Unsplash