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- The week in FX and Crypto: September 16, 2025
The week in FX and Crypto: September 16, 2025
Real-World Trading Insight. No Hype, Just Edge.
mark schaefer
September 16, 2025
In This Issue:
ETH hidden divergence setup delivered 410 points
How the stochastics/price disconnect signaled continuation
Two GBP setups that didn't work - net result +350 points
Week ahead:
ETH - flagged bullish setup on September 5th at 4290, a week later it was at 4700.
ETH was selling off and it looked like it was going to continue. There was no significant level supporting it. Then price stopped moving down but the stochastics continued lower. Each new close near the lows drags the momentum down further.
When momentum made a new low and price stayed in the same place we had "Bullish Hidden Divergence." That's the pattern. It calls for a continuation of the underlying trend.
What Didn't Work
Two other setups didn't follow through:
GBP/AUD: 4-month channel/support broke and closed below the 2.0480/90 channel support. It quickly went another 100 points lower. Pattern negated 30 points from confirmation.
GBP/USD: Negated the bearish setup when it traded above the reversal bar high. Pattern negated 30 points from confirmation.
Once your levels get negated, get out of the trade and move on.
Net result: ETH +410 points, GBP/AUD -30 points, GBP/USD -30 points = +350 points total from one pattern that worked and two that didn't follow through.
Note: These measure market reactions from flagged levels, not trading results. Implementation varies by individual approach.
How Hidden Divergence Works
This type of momentum/price disconnect appears across all markets. The setup requires:
Clear trend direction first
Both price and momentum declining (or rising in downtrend)
Price stops declining while momentum continues lower, creating the divergence
Distance between the two signals matters - wider gaps create stronger moves
The ETH example worked because:
Uptrend was intact
Price made a higher low at 4290
Momentum made a lower low
Week Ahead
Key Levels for the week ahead:
GBP/AUD: Daily bullish reversal bar formed at week's end. Pattern suggests potential retest of the channel breakout level around 2.0480/90 area.
USD Index: Still range-bound. FOMC might be the catalyst to get the USD to move outside of its range.
ETH: Printed a bearish daily reversal bar after trading to 4766 high. With momentum overbought, look for potential test of 4290 support zone from last week, then next support at 4150 area.
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Meridian Compass is brought to you by Mark Schaefer, a quantitative portfolio manager with over 30 years experience developing and trading systematic strategies in global futures and FX at major banks and hedge funds.
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