Ending Diagonal Triangle
Forex Chart Reading
|4-hour Ending Diagonal Triangle/ Wedge Pattern|
Today, the Euro moved up in the European session to the low of 1.2288 (pink line-low of June 1st). From there, the Euro turned around and penetrated yesterday's low. The overall price action on the 4-hour chart might be seen as an ending diagonal triangle/ wedge (reversal pattern).
Yesterday and today until the US session the Euro got supported by the gap opening/ low of Monday (brown line) and market moved to the other key level at 1.2288 (low of June 1st-pink line). Market bounced from this level and found temporary support at the brown line again. However, at 4 p.m. the Euro consolidated at the brown line (Monday's gap opening, green circle on 5 min chart)) and breached this level with the beginning of the new 4-hour candle after the prior 4-hour candle respected this key level (Timing setup-second red circle on 4-hour chart reading). The Euro penetrated yesterday's low. However, the hourly candle found support at the declining trend line and the 4 p.m. hourly candle closed above yesterday's low and bounced back to the brown line (hourly chart below).
From there, the Euro initially moved up to the daily pivot and reversed with the FOMC news at 8 p.m.. Market strongly moved down and broke the recent low at 1.2226. The Euro found support at the daily S1 and the 100 % fib extension on the 5 min chart.
The third succeeding breach of a prior daily low could terminate the diagonal pattern/ wedge (see 4 -hour chart above,1-5). We have to see how price develops further and whether it will be in accordance with the pattern.
On the 4-hour chart (above) we also see how the declining 20 SMA provided resistance to the market and the pink line (low of June 1st) acted as support/resistance yesterday and today (green circles). The two red circles on the 4-hour chart shows the recent two timing setups (break of support after the prior 4-hour candle closed at it (respected it))
The blue circles on the 5 min Euro chart reading (below) show how price reacted at the major support levels (brown line, daily pivot, pink line). The red circle shows a typical three wave consolidation, the small black circle shows the break of the daily pivot (second test and strong momentum candle prior to the break respecting (closing at) the resistance thus weakening it), the brown circle shows a bear flag prior to the break of the daily pivot and the green circle shows a bear flag and Timing setup (4 p.m. after 4-hour close at resistance) prior to the break of the brown line.
|5 min EurUsd Chart Reading|
|1 hour Euro Usd Chart Reading|