There’s little use in picking tops (or bottoms) however when a ceiling or floor is starting you in the face it’s at least time to consider what could happen if prices are rejected from that level.

The daily AUD/USD is one such example. The current trend is still slightly up but not the strong uptrend is has been since March.  This is a time that most the of the chart patterns on the daily will be trending patterns and the support of those patterns will be the decision levels to watch.

Take the daily Channel Up pattern on the AUD/USD.  This pattern is still intact and valid but it’s the potential reversal of this pattern that looks to be the more likely scenario…or at least one worth examining.

The pattern shows the ceiling within the current formation and while the uptrend line support (blue) is still a good deal away from current price action there is the reversal set up that will be there and worth keeping an eye on:

But to take advantage of the current resistance, take a look at the breakdown we’ve already seen:

Note that this was an alert that came at the Frankfurt (2am EST) open today.

The follow through lower form the then sideways market cycle has formed a mark down cycle and now the current set up would be a swing short off resistance if we see an upside correction.

Here’s a current view of the 15 minute chart and the downward angling Wave off which the swing short can be set up.

The bottom line of the Wave is at .8159.  now since it is triggering during the doldrum hours the best thing to do — rather than take this aggro set up — would be to wait for a higher bounce to the bottom line of the Wave on the 30 or 60 minute chart.  That would be a short trigger at either .8176 or .8194 respectively.

The USD/JPY has reached a ceiling at the 96.37 level which was the high from Monday.  The high was made during the end of the Frankfurt/London/New York overlap and if you think I pay more attention to trend, highs, and low that are created while London is trading, you’re right.  In fact, if this high was made during Asia I would want to see confirmation of the resistance during the London trading hours…don’t ignore the 800lb gorilla!

The rejection at the double top has set up a swing on this 30 minute chart but I prefer not taking a trade before the Sydney open and preferably when Sydney overlaps with Tokyo.  If you haven’t checked out Autochartist PowerStats, you should, and you’ll see the different in pip range movement throughout the trading day.

The Forecast Region that the USD/JPY is currently trading in on the 30 minute chart shows the resistance at 95.11 and the support at 94.84.  Since the top line of the Wave is at 94.88 this works nicely with the pullback and swing set up.  Keep an eye on this chart as Asia gets ready to open.  Any trade taken between Noon EST and 6pm EST is to be considered aggressive.

The USD/JPY has been heading down with the Dow today as a little sell-off after what was a very strong week for equities is taking a breather, maybe even a little profit taking.  This can hardly be considered risk aversion but certainly a short term pause in risk appetite (but the day is not done yet as the most important hour for equities, 3-4pm EST, is still approaching!)

The USD/JPY 15 minute has alerted a Continuation Channel Down from Autochartist.  The bounce has taken prices to the downtrend line resistance waiting just above 94.50.  The 30 minute chart just has the 34ema low (bottom line of the Wave) at 94.55 with a down angle further confirming the current downtrend and the resistance.

The zoomed in view of the swing short off the 34ema low here shows the resistance that prices have found here just recently.  Since the 3pm EST last hour of trading is just 20 minutes away, this set up is particularly interesting since if traders return from lunch and sell equities this is a perfect set up to capitalize on that.  For traders who don’t like entries post-London and before the Asian session, keep an eye on the 60 minute USD/JPY which has a 34ema low at 94.67 which could trigger later as the markets gear up for the Sydney open.

The USD/CAD has been trending lower towards support that is waiting just below the 1.0800 psychological level.  This low was made June 1st at 1.0778.  Expect support between these levels.  This double bottom is interesting not because it necessarily set ups an entry — although if I find a time frame in a distribution cycle I will set up an inside-the-range play off a solid support or resistance are - but I digress.

This pattern is worth watching because if prices are able to rally once again off this floor there are a falling wedge patterns (shown here on the 60 minute time frame) on the short term intraday chart.

This would be a reversal trigger if prices are able to pierce the downtrend line resistance currently at 1.0840.  If prices fail to break out, then the trend follow can be taken, in fact that should be the set up to watch for first as it’s often a failed trend follow that will trigger a reversal play.

As the USD/JPY is setting up a 30 minute swing buy heading into the early Asian session, there is great confirmation of the breakdown leading to the correction on the 15 minute.  The 15 minute chart shows that the Continuation Channel Up pattern has traded down through uptrend line support.  This represents a reversal of the short term intraday trend.  The 15 minute time frame represents a very short term psychology however it’s the short term psychology that can build into a bigger move.

The 30 minute USD/JPY trigger will be the 34ema high (top line of the Wave) which is currently at 94.73.  Since prices have already traded below the major psychological level of 95.00, there is a good chance that the correction will continue lower since “00: breaks can and will often pullback to the “80″ pip level - because of this a more aggressive entry long would be off the 94.80 rather than waiting for 94.73.

The 60 minute chart is setting up a congestion pattern, a continuation triangle, as the Asian session in just getting underway.  The pattern is confirmed by the accumulation market cycle shown on the lower chart which has the Wave heading in a three o’clock direction.

Remember when taking Wave clock angle reading that you have the proper lookback or “market memory” on your chart.  for a 60 minute time frame that’s ten trading days or approximately two weeks.

The MACD Hisotgram is currently above the zero line which means that any pierce through downtrend line resistance would trigger a momentum buy.  The downtrend line is ofcourse a dynamic level but for now it’s sitting just below the 133.50 level.

The EUR/USD has been climbing through the afternoon — New York session doldrums — and while the move through 4200 has been made, the proof of follow-through will have to wait until the Asian session.  In the meanwhile there’s no reason the we can’t keep our eyes open for potential set ups.

The 12-2 o’clock uptrend on the four hour chart is setting up the rising wedge pattern perfectly.  All trending patterns can do one of three things and I will look at them in this order.  First, the trend follow off uptrend line support or Wave support.  The top line of the Wave is currently at 4151 while the uptrend line is just below 4180.  Second would be the reversal trigger which would mean that the support levels did not hold and the uptrend was broken.  Third is the breakout which would be through uptrend line resistance which is the upper line of the wedge pattern.

I was looking for pressure from the 4200 level to possibly push prices lower to the corrective buy but since the 15 minute chart was signaling at swing short during these doldrum hours the trade was a no-go…

I don’t typically like to identify a trending pattern like a channel or wedge as “continuation” or “reversal” but I will take it under advisement.

The 60 minute AUD/USD has a nice looking pattern set up as the uptrend (see chart below) is a perfect environment for a trending pattern play.  There are clues on the Autochartist pattern alert that could indicate a potential reversal.  For one, the low Initial Trend reading is not one that would typify a strong trend.  However since the trend is up (12 to 2 o’clock Wave angle) then I will consider the trend follow first and then only if prices breakd down through the uptrend line support and/or the bottom like of my Wave (34ema low) will I consider a trend reversal.

The trend follow could be set up either off the top line of the Wave (34ema high) or the uptrend line of the channel up pattern.

I always combine my Wave analysis with chart patterns since the best patterns are those that are occurring in the correct market cycle.

Here are two Autochartist chart pattern alerts that I am setting up for a potential swing short on the USD/CHF that I’m watching.

The swissy is setting up a swing short as both the 15 and 60 minute charts are in a downtrend.  The trigger on the 15 minute chart is at the 1.0750 level  which is the more aggressive of the two shorts.  The 60 minute needs a higher bounce as the trigger is currently at 1.0765.

The downtrend on the 15 minute is transitional as the market cycle is trying to go from the downtrending angle to a more sideways accumulation or distribution cycle.  This alone could be reason enough to leave this set up alone and focus on the 60.  The other possibility on both chart patterns is for a reversal through the downtrend line resistance.  I will go with the trend follow first and often it’s the failure of the trend follow that will trigger the reversal.

Let’s look at the EUR/USD and the set ups across the end-of-day and 30 minute timeframe.

The daily EUR/USD is consolidating within a triangle, an asymmetrical triangle, on the daily chart.  The downtrend resistance is still waiting just above the 4100 level and has not yet triggered through this level…however the surge higher is not without its set ups.  Look intraday for those opportunities.

The 30 minute timeframe is heading up in a “twelve to two o’clock” angle and this — for me — is an opportunity to play a trend follow or “swing”.  The “swing” of swing trading is the correction, in this case a pullback.  A swing or pullback to either the 20% Fibo or the top line of the Wave (34ema high) would be a buy set up.  The validity for the trade is as long as 1) prices stay above the bottom line of the Wave (34ema low) and 2) the angle of the Wave itself remains at 12 to 2.