The EUR/USD is heading sideways inside a wide ranging congestion pattern.  The double top pattern has a floor and ceiling that has prices bouncing off support and resistance.

The play is now heading up to the ceiling and if price continues to find selling pressure as 1.3740 approaches — the last three tops are 1.3737, 1.3726, and 1.3735 — then there will likely be another opportunity to play a short of the ceiling.  If price at some point breakout beyond either support or resistance then it’s possible that a momentum play has triggered.  Look to confirm any breakout with the MACD Histogram.

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The uptrend lines on the daily were broken to the downside and the 30 minute — while not pretty — eventually took out uptrend line support as well.

But it was this four hour chart that too went lower, but was such a thing of swing trading beauty.

This was among the charts we looked at.  What i want to stress here is that all three set ups were essentially plays off USD/CAD weakness.  Choosing which to take is as much a function of findhing which has the cleanest set up but also which presents the best risk/reward ratio that is appropriate for your account.

Look for support neat the 1.2400 major psychological level as we’re alredy sliced through 2500.

Between the Wave and a hard place: I’ve been playing the top just beyond 1.3000 on the USD/CAD and there have been plenty of reasons to keep an eye on this level as the canada continues to congest between the Wave and the ceiling.

Prices are trading on the strong side of the Wave and price has been respecting the support of the uptrend line where the USD/CAD is trading now.

There really isn’t a current set up on the daily canada as prices are far south of the 3000 ceiling.  There are however opportunities amid the weakness on the 60 and 240 minute charts.  The 240 is setting up a swing short off Wave resistance.  The clock angle is not a great four to six o’clock angle but there is decent resistance at the 34EMA low.

The 60 minute chart is heading sideways and setting up a momentum play.  In any sideways market scenario be ready for a break to the up or downside.  Currently the the MACD Histogram is positive but that doesn’t mean it will be there if or when prices break out of the consoldation.

The GBP/USD is breaking down through the uptrend line support.  This pattern has broken out mainly because — as in the case of any self-limited pattern — this triangle simply ran out of room.  The break then is price moving slightly lower as it trades through what I call the “narrows” of the triangle.

This doesn’t necessarily mean the break is invalid.  But it does mean that I am likely to look for nearby support and resistance that is likely to test the bears’ resolve to move the cable lower.

So far the support that has developed is sitting just below the original breakdown and is holding.

Bears should be happy that all this is still occuring below the 1.4100 level and that there is near term resistance going into the Asian session at minor psychological level of 1.4080.  The next near term support is waiting at 1.4050.

It’s Friday and I am in half-day trading mode so I thought a nice educational updated would be perfect going into the weekend.  I’m going to walk you through using an invalid chart pattern alert, two different intraday trends, and confirming Initial Trend readings on the your Autochartist alert.

The two patterns that have formed on the charts are setting up to entirely different trades, the only thing being the fact both are trending pattern alerts.

The 240 minute chart however is not heading in a mark down cycle so the pattern alert is not valid BUT the downtrend line of the pattern will be a level to watch for a potential breakout.  In this way, even invalid patterns can be helpful.

So since I am looking at a potential break out through resistance on the 240 and a potential trend follow buy on the 30, these two time frames have more in common than it may look like at first glance.

One thing I need to caution you when looking at trending and non-trending markets is to be sure and confirm the “Initial Trend” reading with the current market cycle before assuming that the underlying market environment is a good match for the alert!

Again the 30 minute chart shows a weak reading on Initial Trend, no doubt partially correct because of the recent consolidation before the pullback.  But when looking at the market cycle, the trend is a strong uptrend.

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Here’s a look at a triangle breakdown on the 60 minute USD/JPY.  I’m sure many of you have taken advantage of the chart pattern alerts right here at FXStreet.

There are a number of what as known as “quality indicators” that accompany each chart pattern alert.

Let’s take a look at those for a moment to get a better read on this set up.

Initial Trend is low.  This is fine, even good, because a triangle is a consolidation/congestion pattern that ideally develops in a sideways market.

Uniformity is medium.  Although I would like the uniformity to be higher, indicating that the touchpoints of the trendlines are spaced evenly within the pattern, for shorter term set up it can be low.  The pattern itself is only 72 candles larger.  That means that pattern developed and triggered in less than three sessions.

Clarity is high and this is always good.  Clarity can be considered the aesthetic value of a pattern.  Some patterns simply look good or right.  The clarity reading takes the subjective and offers an objective measurement.

The key to follow through on this set up will be the 97.89 low from yesterday giving way.

…playing the bounce here.

Watch the downtrend line resistance (green line) for a short play as price reaches the resistance of the pattern.

With prices above the 1.2600 level there is a chance that prices could bounce higher on the break up through the “00″.

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I’ve been watching the daily aussie for a breakdown as I posted in the previous update.  With the 0.6300 level now holding as support and the aussie trading near the 0.6450 psychological level, it looks like my daily trade is going to be taking the scenic route.

This doesn’t mean the daily set up is no longer valid, it just means that I can look at some other intraday opportunities.

The15 minute chart broke the intraday resistance of the downtrend line (green) and rallied higher to and through the forecast region plotted by Autochartist.  The rally has the intraday time frames like the 240 (below) heading towards breakouts of their own.

The daily chart set up would certainly be under pressure of going invalid if the 240 triggers and encourges more longer term intraday buyers to react.  These are the signs I look for across multiple chart pattern alerts.

In the meanwhile the 15 minute time frame is ripe for swing set ups.