The EUR/USD is climbing higher today as the U.S. Dollar Index breaks down through key support at 84.50.  The dollar loss is the fiber’s gain at the pair is testing 3300.

This level would also represent at break out from the triangle pattern on the 240 minute chart.  It’s not a pattern that is a ideal pairing for the current market cycle as the 240 min. is in distribution, but it’s not totally wrong either since the downtrend line resistance is a barrier that would be a breakout trigger.

The main question is this “too far too fast” and if in the end a double top will form rather than follow through for the breakout.  The April 24th high was at 1.3300 and prices have found their way up to 1.3329.  It would be a loose double top but without support back at the “00″ there could be a retracement that would likely entice short selling as prices dove back through the old high.

Distribution cycles, unlike their accumulation cycle cousin, make for this type of unpredictable breakout and breakdown action.  There is more volitliity in distribution that could easily lend itself to for whipsaws.

The USD/CAD has been heading lower at the crude oil market slices and dices up and down through the 50 decade level.  The weaker crude market should not be pushing the loonie up over the greenback but today’s strong U.S. Dollar Index is doing just that.

The swing short would set up as prices are reaching the resistance of the downtrend line (green) of the Continuation Channel Down.  The 30 minute chart is heading higher as it follows through from the triangle pattern breakout earlier in the afternoon.  The Forecast Region resistance is waiting at between 1.2240 and 1.2320.

These patterns have two different ceilings to watch.  Waiting for the ceiling on the 240 minute pattern means watching the 1.2170 to 1.2200 area.  The 30 minute is pointing to a ceiling that reaches 1.2240 and this would pierce the downtrend line resistance onteh 240 triggering a trendline reversal buy.

We talked quite a bit about correlations and market pulse today…so if you’re still getting up to speed on that kind of analysis this is a good place to continue that.

The video runs just over 30 minutes.

Pull up a chair…