USD/CAD Double Top and Triangle Set Up
Rejection from major psychological levels is also referred to as "figure fatigue". The "figure" is the "00" price level so in this example of the USD/CAD the figure would be 1.1100.
Notice that as prices climbed higher within the Continuation Triangle chart pattern on the 240 minute chart the 1.1100 figure acted as a ceiling. This type of occurrence is because sell orders are waiting at this price and push prices lower as the sell orders are executed. If there are enough buyers supporting the figure then prices may either:
1) congest around this area neither selling off nor rallying; or 2) accelerate through the figure.
The highs 1.092 (A) and 1.1103 (C) that created the ceiling are also the touchpoints that formed the resistance line of the triangle. This shows that the figure fatigue or exhaustion occurred as buyers were overpowered by sellers in a classic bulls vs. bears battle. This happened around the 1.1100 level. It prevented a breakout through the resistance line of the triangle. This chart pattern is fairly small at only 21 candles (D). Two highs form a double top, a chart pattern which is widely watched amongst traders. Added depth of price action together with the Autochartist triangle pattern offers more options as to the setup.
As there is a uptrend support line (E) the push lower could trigger a breakdown through the bottom of the triangle chart pattern. This would be required in order for prices to be able to overcome what will be support at the 1.1000 figure.
The Initial Trend (B) is not too low. This suggests that while this chart pattern is not forming in a strong trending environment, there is enough volatility for the market cycle not to be considered as accumulation but rather distribution. Either cycle is suited for triangle set ups. The distribution cycle would mean that prices would more than likely lead to fatigue near key levels (like figures). This would occur rather than follow-through with a breakout or breakdown.
For further information on this and other chart patterns visit www.autochartist.com
Notice that as prices climbed higher within the Continuation Triangle chart pattern on the 240 minute chart the 1.1100 figure acted as a ceiling. This type of occurrence is because sell orders are waiting at this price and push prices lower as the sell orders are executed. If there are enough buyers supporting the figure then prices may either:
1) congest around this area neither selling off nor rallying; or 2) accelerate through the figure.
The highs 1.092 (A) and 1.1103 (C) that created the ceiling are also the touchpoints that formed the resistance line of the triangle. This shows that the figure fatigue or exhaustion occurred as buyers were overpowered by sellers in a classic bulls vs. bears battle. This happened around the 1.1100 level. It prevented a breakout through the resistance line of the triangle. This chart pattern is fairly small at only 21 candles (D). Two highs form a double top, a chart pattern which is widely watched amongst traders. Added depth of price action together with the Autochartist triangle pattern offers more options as to the setup.
As there is a uptrend support line (E) the push lower could trigger a breakdown through the bottom of the triangle chart pattern. This would be required in order for prices to be able to overcome what will be support at the 1.1000 figure.
The Initial Trend (B) is not too low. This suggests that while this chart pattern is not forming in a strong trending environment, there is enough volatility for the market cycle not to be considered as accumulation but rather distribution. Either cycle is suited for triangle set ups. The distribution cycle would mean that prices would more than likely lead to fatigue near key levels (like figures). This would occur rather than follow-through with a breakout or breakdown.
For further information on this and other chart patterns visit www.autochartist.com
- 4 September |
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