Autochartist Forecast
Flag and Channel Chart Patterns: A look at today's EUR/USD
The EUR/USD was sent sharply lower by the equities sell-off and yesterday's subsequent flight to safety into the U.S. Dollar. But as the Dow recovers slightly pre-market this morning and (for now) the U.S. Dollar is not needed as a safe haven, the EUR/USD is forming uptrending patterns on short term intraday time frames.
The 15 minute chart has alerted a channel pattern while the 60 minute chart has formed a flag. These patterns are very similar in appearance but the psychology behind the two is distinctly different.
The Continuation Flag pattern on the 60 minute chart is a pattern that is taking advantage of the current uptrend as the EUR/USD is in correction mode from yesterday's weakness. The flag pattern is known commonly to be a reversal pattern but essentially it is a shorter, usually wider channel. Notice the Length of the pattern is only 20 and also that the trend is strong. This pattern does not necessarily require the type of strong trending readings that would be preferable for a channel. The set ups are identical to a channel, but remember that since the pattern is traveling upward it is in fact known as a "bear flag" since there is a commonly held perception that this formation is a reversal set up. Nonetheless treat it like a channel.
The 15 minute chart has formed a Continuation Channel Up for the same exact reasons the 60 minute has formed the flag pattern. The short term intraday trend is higher and this is confirmed by the 15 minute's high Initial Trend reading. However notice where prices are right on the the channel: at the support line. The blue uptrend support line is the decision level on this formation. Currently prices are testing support and correction setting up a swing. Also notice that prices have very slightly pierced this level which could trigger a reversal. So there is a lot happening at the uptrend line and the easiest thing to do would be to wait and see if buyers will support the 1.4100 major psychological level before shorting a breakdown.
For further information on these and other chart patterns, visit http://www.autochartist.com
The 15 minute chart has alerted a channel pattern while the 60 minute chart has formed a flag. These patterns are very similar in appearance but the psychology behind the two is distinctly different.
The Continuation Flag pattern on the 60 minute chart is a pattern that is taking advantage of the current uptrend as the EUR/USD is in correction mode from yesterday's weakness. The flag pattern is known commonly to be a reversal pattern but essentially it is a shorter, usually wider channel. Notice the Length of the pattern is only 20 and also that the trend is strong. This pattern does not necessarily require the type of strong trending readings that would be preferable for a channel. The set ups are identical to a channel, but remember that since the pattern is traveling upward it is in fact known as a "bear flag" since there is a commonly held perception that this formation is a reversal set up. Nonetheless treat it like a channel.
The 15 minute chart has formed a Continuation Channel Up for the same exact reasons the 60 minute has formed the flag pattern. The short term intraday trend is higher and this is confirmed by the 15 minute's high Initial Trend reading. However notice where prices are right on the the channel: at the support line. The blue uptrend support line is the decision level on this formation. Currently prices are testing support and correction setting up a swing. Also notice that prices have very slightly pierced this level which could trigger a reversal. So there is a lot happening at the uptrend line and the easiest thing to do would be to wait and see if buyers will support the 1.4100 major psychological level before shorting a breakdown.
For further information on these and other chart patterns, visit http://www.autochartist.com
18 August | 
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