EUR/USD Intraday Downtrend Set Ups
The EUR/USD is heading lower across the 15, 30, and 60 minute charts in a mark down cycle. Knowing the market cycle makes the next step of filtering the chart pattern results from Autochartist very simple: Look for channel down or falling wedge chart pattern alerts.
The 15 minute chart had broken down earlier this morning as prices found selling pressure below the downtrend line support (X). This could have been the second chance at the trend following play. This as the downtrend line resistance (Y) was a corrective entry short not only off a downtrend line, but also the 1.4350 psychological level. This level is also a neat term ceiling. Putting together psychological price areas and the floors and ceiling on a chart to identify decision levels is a simple but powerful technique. Note that the Initial Trend (Z) was very low for a trending pattern set up. So even with the entry triggered by weakness, there should be some skepticism as far as follow-through. This was identified by the Complete Pattern alert at between 1.4290 and 1.4280 (W).
The current set up on the EUR/USD is a slightly longer term view of the same set up: An Emerging Pattern alert on the 30 minute chart.
The Reversal Falling Wedge is following the same mark down cycle as the 15 minute chart. But since it is a slightly longer time frame, the pattern is slightly different. It is important to consider the Length (R) of the pattern as this offers insight into the psychological relevance of the pattern's size. More length will typically mean more attention on the pattern because it has taken more time to develop. It has taken 38 thirty minute candles to form the Falling Wedge, which equals 19 hours. Compare that to the 22 fifteen minute candles which is only 5 1/2 hours.
With prices currently at the downtrend line resistance (S), this is a swing set up which is a corrective entry following the downtrend. Corrective entries are trend following entries that take advantage of short term movements against the trend. They rely on decision levels like the downtrend line resistance (S) coupled with the proximity to the 1.4300 psychological level (T) to identify ceilings. In this case it is a slight bounce within the wedge pattern.
With the Initial Trend (U) especially strong, the trend follow should have reliable downside follow through on the short plays. Be aware however that any pierce of the 1.4300 level would signal a shift in the trend and a trigger an upside reversal.
For further information on this and other chart patterns, visit www.autochartist.com
The 15 minute chart had broken down earlier this morning as prices found selling pressure below the downtrend line support (X). This could have been the second chance at the trend following play. This as the downtrend line resistance (Y) was a corrective entry short not only off a downtrend line, but also the 1.4350 psychological level. This level is also a neat term ceiling. Putting together psychological price areas and the floors and ceiling on a chart to identify decision levels is a simple but powerful technique. Note that the Initial Trend (Z) was very low for a trending pattern set up. So even with the entry triggered by weakness, there should be some skepticism as far as follow-through. This was identified by the Complete Pattern alert at between 1.4290 and 1.4280 (W).
The current set up on the EUR/USD is a slightly longer term view of the same set up: An Emerging Pattern alert on the 30 minute chart.
The Reversal Falling Wedge is following the same mark down cycle as the 15 minute chart. But since it is a slightly longer time frame, the pattern is slightly different. It is important to consider the Length (R) of the pattern as this offers insight into the psychological relevance of the pattern's size. More length will typically mean more attention on the pattern because it has taken more time to develop. It has taken 38 thirty minute candles to form the Falling Wedge, which equals 19 hours. Compare that to the 22 fifteen minute candles which is only 5 1/2 hours.
With prices currently at the downtrend line resistance (S), this is a swing set up which is a corrective entry following the downtrend. Corrective entries are trend following entries that take advantage of short term movements against the trend. They rely on decision levels like the downtrend line resistance (S) coupled with the proximity to the 1.4300 psychological level (T) to identify ceilings. In this case it is a slight bounce within the wedge pattern.
With the Initial Trend (U) especially strong, the trend follow should have reliable downside follow through on the short plays. Be aware however that any pierce of the 1.4300 level would signal a shift in the trend and a trigger an upside reversal.
For further information on this and other chart patterns, visit www.autochartist.com
- 31 August |
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