There’s two opportunities here and I’m focusing on the short term time frames because it’s Friday and it’s still early in the New York session.  The clarity of the market cycle is also a factor.  Notice the mark down cycle is steep and the bounce cold trigger the channel’s resistance and this could be a buy trigger which would be aggressive since the trend is down.  However, the short would be best with a higher bounce above both the channel’s resistance and the 23.6 Fibonacci Retracement level and at the 34ema low.

All three charts were created with MT4 and the Autochartist Chart Pattern plug-in.

The 15 minute EUR/USD has rallied from 1.4807 and is trading just below the 1.4900 level.  So the obvious question is:  Will it continue to rally through this next major psychological level?  The answer to that lies in the way short term psychology is currently behaving.  The Continuation Down Channel that formed on the 15 minute time frame has broken up higher though downtrend line resistance.  The Initial Trend reading (T) shows that current market cycle is sideways but this also means that the prior trend lower is taking a break, for now.   This move up through resistance does represent a trend break but the 1.4900 will dictate how much higher buyers can take the EUR/USD.

Another way of identifying resistance and perhaps a short entry is the Three Point Retracement that has formed on the 15 minute chart as well.  The rally to C represents a 0.618 to 0.786 correction of the AB leg.  Since the market is sideways and also trading under 1.4900 keep an eye on the area between C and the A high at 1.4898 as this is a sell zone.

Both chart were created with Autochartist Chart Pattern and Fibonacci Pattern software.

The 60 minute EUR/USD has formed a Three Point Retracement as an sell-off from A to B has retraced to the C point and set up a short set up.  This is one of my favorite Fibo patterns.  The C point represents a high point between the 61.8% to 78.6% Fibonacci Retracement levels.  As long as prices do not exceed the high of A, the area between the 0.618 and A will be an opportunity to short intro the correction.  The support levels below C are the Fibonacci Retracement support levels that could be potential downside targets.  Pay particularly close attention to the .0618 to 0.786 levels are this area has already been a factor today and is near term support.

This chart was created with Autochartist Fibonacci Pattern software.

Here’s a look at the GBP/USD - this is more of an instructional post as I usually rather post trades that are setting up, but I realize that to see what I am trying to do with both trade and risk management, I have to share a completed entry and trade.

Here’s a look at the 30 minute cable last night as it was trending higher and a rising wedge formed WITH 34ema high support.  One of my favorite ways to set up patterns is when the support (or resistance) of a trending patterns (like this rising wedge) falls within the support or resistance of my 34ema Wave.  Notice how the uptrend line support of the wedge is lined up the the 34ema close of my Wave…

The swing entry would be valid anywhere between the 34ema high and the uptrend line support.

Once the trade is triggered - in this case off the 34ema high - I will take note of nearby psychological levels and pull a Fibo Retracement or Extension.  Here I pulled an Extension because I did not see a “clean” last, major move.  There was actually a somewhat ugly ABCD Fibonacci Pattern…which had me focusing on the 78.6 and 88.6 levels as a potential ceiling.  Remember that the wedge pattern has a resistance level to watch as well!  the to line of the wedge will also act as a ceiling unless prices are able to pierce it.

And here’s what the market did after bouncing off the support of the Wave.  I also want you to notice the resistance of the wedge - it was never broken.

All three charts were created with MT4 and the Autochartist Chart Pattern plug-in.

This chart was created with Autochartist.

Longer term charts can take the ebbs and flows of bounces and pullbacks while still trading within a pattern.  A 240 minute chart will move more within a single candle than a 30 or 60 minute typically can or will.  This has to do with the power of time:  If given enough of it prices will cover more ground.

The pullback with the pattern hit 1.4826 and created the touchpoint for the uptrend line all while the Initial Trend dropped - this means that the uptrend is likely transitioning to distribution or accumulation.  The channel itself does not indicate a trend but simply support and resistance.  Confirm the pattern with the Wave. (see below)

The uptrend line is still very important as the market cycle moves sideways as this would be a potential breakdown if momentum shifts lower.

This chart was created with MT4 and the Autochartist Chart Pattern plug-in.

The 15 minute EUR/USD is trading just below the downtrend line resistance of the channel down pattern as prices are finding selling pressure between 1.4880 and 1.4900 which are the minor and major psychological levels that are still holding on the this short term intraday chart.  A breakout on this chart would be in line with the swing bounce that the daily chart off the support of the Wave.

The USD/CAD is in a strong mark down cycle so we’re in swing mode waiting for a bounce to the bottom line of the Wave or more aggressively to the top line of the falling wedge pattern.  The 34ema low is currently at 1.0466 but remember that this is a dynamic level and will change as prices move.  Note that the short off the downtrend line is much closer a short trigger than the Wave low.  The 30 minute chart swing short has a 34ema low triggering at the 1.0447 which sets up the short just in front of the 1.0450 psychological level.

UPDATE: The wedge has broken at the downtrend line resistance and prices have broken the top line of the Wave and triggered a trend reversal on the 60 minute chart.  The horizontal blue line which is at 1.0499 is the forecast area which is the upside target and resistance for the breakout as well at the 1.0500 level.

This chart was created with MT4 and the Autochartist Chart Pattern plug-in.

With the 1.5062 high and prices currently with 20 pips of that peak, the 240 minute EUR/USD is setting up a double as the trend is still up.  If prices are rejected from this area again, I’m looking for a correction to the 1.4950 level.  There is also support just below that between 1.4946 and 1.4937 which is the top line of the Wave and recent low, respectively.

The chart pattern could also present some interesting set up as the first support level to break will be the support of the rising wedge pattern.  Since it is so close to the trend following buy set ups, I’m not looking for an aggressive short.

This chart was created with MT4 and the Autochartist Chart Pattern plug-in.

The dollar-yen is bouncing around within a wide range as the Continuation Ascending Triangle has not yet reached the “narrows” of the pattern.

The “narrows” of a pattern occur when you have a self-limiting pattern like a triangle or wedge where the pattern’s range steadily decreases until there’s no room left for prices to move and the pattern is broken.

The range has three major psychological levels within it.  The 92.00, 91.00, and the 90.00.  Finding where prices may bounce while within the triangle pattern can offer some insight into where and which way the pattern may eventually break - or - whether it may break at all.

The “C” level sits at 91.05 while the “A” is at 91.62.  Notice that USD/JPY has made a full 100% retracement back to “C”.

If prices are sent down lower from the 1.000 level, the eventual downside target which would complete the AB=CD pattern would be at 88.65.  This low would also trigger the triangle breakdown through the uptrend line support currently near 89.20.  With an ABCD pattern where “A” and “C” are the high points, the entry would be to buy “D” when prices reach that low.  This would also make “D” a potential downside profit target for the triangle breakdown.

Both charts were created using Autochartist Chart and Fibonacci Pattern recognition software.

With the daily chart of the EUR/USD now transitioned to a sideways market cycle, the uptrend has shown it wants to take a breather.  But NEVER assume that a trend stall = a trend reversal.  With the channel pattern’s uptrend line support, this trend looks like it’s ready to CONTINUE.

The trendline I have been watching closely isn’t just the daily chart’s support - it’s the 240 minute’s resistance.  The 240 minute chart transitioned into a downtrend with the dramatic sell-off on October 26th.  Today the downtrend line resistance of the falling wedge formation has been broken and while I am also watching the 34ema high to CONFIRM the downtrend reversal on this time frame, the first step — the pattern break — has occurred.

Both charts were created with MT4 and the Autochartist Chart Pattern plug-in.