Zooming into Time Frames to Compare Pattern Alerts: Today's AUD/USD
This morning's AUD/USD is a perfect example of what we call time frame comparison or "triage". Triage comes from the French "to sort" and that's exactly what traders must do with multiple chart patterns. An effective way to do this is to "zoom in" to a smaller and smaller time frame to see the nuance of the current price action.
Generally speaking, shorter time frames will have less risk (and potential reward). This is due to the smaller pip range of each candle that makes up the pattern. The daily chart of the AUD/USD shows a Continuation Rising Wedge pattern that has a relatively low Initial Trend for what should be a trending pattern in a mark up cycle. The daily "aussie" is in an uptrend but it is slowing. Prices are reaching the 0.8500 major psychological level as well as the highs from September 2008, so a continuation play relying on further strength may be a risky entry.
The next chart is of the 240 minute AUD/USD. This chart represents the next smaller time frame in Autochartist and the longest intraday time frame most traders will look at. The 240 chart is also indicating a slowing uptrend with the low Initial Trend reading. This reflects the current market cycle on this time frame, which is distribution.
This next time frame is commonly the shortest time frame many traders will consider and that's the 15 minute chart. It is also the smallest time frame on Autochartist. The 15 minute chart reflects a short term but also the most recent psychology of the market. The market cycle is sideways and signaling no current trend. This is exactly what a triangle pattern would need to be confirmed as it is a congestion/consolidation pattern. The Continuation Ascending Triangle alert has a low Initial Trend which is ideal. It has excellent Uniformity and Clarity readings which means the patterns has clear lines and levels forming the triangle.
There are two set ups here. The first would be to wait for a momentum breakout through the ceiling or floor. The second would be a more aggressive exhaustion play off the resistance of the horizontal ceiling as a short entry.
For further information on these and other chart patterns, visit
http://www.autochartist.com
Generally speaking, shorter time frames will have less risk (and potential reward). This is due to the smaller pip range of each candle that makes up the pattern. The daily chart of the AUD/USD shows a Continuation Rising Wedge pattern that has a relatively low Initial Trend for what should be a trending pattern in a mark up cycle. The daily "aussie" is in an uptrend but it is slowing. Prices are reaching the 0.8500 major psychological level as well as the highs from September 2008, so a continuation play relying on further strength may be a risky entry.
The next chart is of the 240 minute AUD/USD. This chart represents the next smaller time frame in Autochartist and the longest intraday time frame most traders will look at. The 240 chart is also indicating a slowing uptrend with the low Initial Trend reading. This reflects the current market cycle on this time frame, which is distribution.
This next time frame is commonly the shortest time frame many traders will consider and that's the 15 minute chart. It is also the smallest time frame on Autochartist. The 15 minute chart reflects a short term but also the most recent psychology of the market. The market cycle is sideways and signaling no current trend. This is exactly what a triangle pattern would need to be confirmed as it is a congestion/consolidation pattern. The Continuation Ascending Triangle alert has a low Initial Trend which is ideal. It has excellent Uniformity and Clarity readings which means the patterns has clear lines and levels forming the triangle.
There are two set ups here. The first would be to wait for a momentum breakout through the ceiling or floor. The second would be a more aggressive exhaustion play off the resistance of the horizontal ceiling as a short entry.
For further information on these and other chart patterns, visit
http://www.autochartist.com
- 14 August |
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