The short term charts of the 15, 30, and 60 minute EUR/USD are moving within a distribution cycle on the heels of yesterday’s big rally.   The Dow’s strength pushed the U.S. Dollar Index lower as risk appetite in equities roared back.  In the shadows of a +199 point day in the Dow is today’s -29 pre-market as traders aren’t sure just how much the GDP number reflects the long uphill climb ahead for the U.S. economy:  buy now, ask later was the rule for the rally.

If traders decide to be non-committal in front of the weekend, there are some near term exhaustion shorts that be set up off the triple (soft) top between 1.4859, 1.4858, and 1.4853.  The distribution cycle holds the validity for this aggressive short.  If the market flattens out to accumulation, it turns in a breakout/breakdown strategy.

There’s also a rising wedge on this chart and the uptrend line support could be helpful if the Dow climbs again after the 8:30am, 9:45am, and 9:55am EST data releases.

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

I want to do some continuing analysis and follow up to my post of the 22nd about the swing on the 240 minute USD/JPY.

The trade did confirm as prices bounced (corrected) into the bottom line of my Wave…the 34ema low. You can see that post here.

So the what’s happened since then?

The swing is still but…the market cycle has shifted to more of a sideways market cycle.  So here’s what to consider:

Is the trend still down?  NO

Is the reason for the swing short (Wave resistance) still in place?  YES

Is there another trade set up to begin considering?  YES, a MOMO

The Dow is up 195 points as the bonds are getting ready to close but the USD/JPY did not trend up higher indicating that there is much risk apprtite.  In fact gold did not sell off much indiacting risk appetite and the U.S. Dollar has been holding onto 80.00 support.  If I were a betting kinda gal (I’m not!) I would say that this rally is not supported by the cast of characters I would want to see if the rally were going to hold onto its gains tomorrow.

Good new for the Dow has been sending the dollar lower and so with that logic today’s better-than-expected Consumer Confidence number would have sent the dollar through 80.00?

So I am still happy with the swing since even with an up day on the Dow, resistance is holding in the dollar-yen.  BUT I am keeping my eye on a potential momo (breaktout/breakdown) set up all the same.

So let’s start with my quad view….

The 60 minute USD/JPY is trending lower as the intraday trend is down.  The set up here will be looking for a swing entry which means I am trend following.

Swing trading is trend trading!

The resistance is at the downtrend line which is currently sitting at 97.05 but remember trendline are dynamic so this level will close in on price with each new candle. The upper right chart has a three outside candle pattern sell set up that triggered 12 hours ago.  The beige area shows the resistance and also stop loss area for the pattern.  As long as the Wave (lower left chart) continues to trend lower at four to six o’clock I will be treating this as a mark down cycle and look for short bounces.  The lower line of the Wave is at 96.51.

Let’s zoom in on the Fibonacci retracement chart…

There are a few “last major moves” I could look into here and this is the largest move of the three I looked at.  It also shows resistance at the 25% which coincides with the bottom line of the Wave.  I am also interested in the 38.2% as that is very close to the point of validity (think: stop loss) for the swing entry and will ideally provide some selling resistance to keep prices below the top line of my Wave.

There’s a lot to think here but it all works together and that’s the way the forex market works.

I am going to look at current levels in crude oil using the USO symbol, intraday support int the fiber, and what this all means to the safe haven play in the dollar.

The intraday EUR/USD has reached and bounced off a 30 minute forecast region.

The supprt on the 30 minute chart sits between 1.2730 and 1.2710.  The channel down pattern is a trending pattern so the forecast/support cannot be taken as a reversal but rather jsut a bounce.  An intraday reversal would come if prices can get north of 1.2865.

The USO (United States Oil Fund) is hovering just above support which is waiting between 25.18 and 22.93.

If oil begins to attract buyers at this low price, if traders feel it is “oversold” this will all culminated toa rally back at the key $40 decade level.  In turn it will put pressure on the dollar.  While the dolllar might be enjoying safe haven status, it’s looking awfully tippy up here above 86.00 and has not been able to get footing above 86.50, a major psychologicla level.

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Join me there.

Thanks to the many of you who have emailed me…at this point my Inbox may explode…enter Facebook.  I’ll be using Facebook more as support for the chats and the blog.

I’m working on a Chartbook I’ll be adding to there.  Here’s a sample of an opening range chart from this morning’s London session that I shared with my buddie Aaron at Facebook.

Remember this alert from a couple posts ago?  scroll down

Now with the cable selling off sharply through the support of the rising wedge now what?

The two uptrend lines I have drawn are representative of the reversal and sell-off and they represent the reversal play from the breakdown of the wedge pattern. 

Remember:  Every trending pattern can be played as 1) trend follow and 2) trend reversal.  In this case there was opportunity for both.

 - Raghee

How can you best position yourself to trade a market that never sleeps. All of us have different schedules and lives but the forex market can be traded by anyone who understands when the moves start, when they hold, which financial centers are the largest and most volatile, and whether to play breakouts and breakdowns or follow the trend.

It’s not complicated and can be done with some simple tools.

Join Raghee Horner as she walks you through her various methods of identifying support and resistance, trading times, set ups and confirmations.

Raghee will also teach you how to use correlations to better understand how the forex markets works with non-forex markets like the U.S. Dollar Index, Dow Jones, crude oil, and gold.

Link to register (and enter) for part 1

http://www.fxstreet.com/live/sessions/session.aspx?id=cf5749e7-74ec-43c9-b3d4-00bc017b6bbd

Link to register (and enter) for part 2 - Premium

http://www.fxstreet.com/live/sessions/session.aspx?id=bd432f66-4662-4141-a723-a124ce0cc6ab