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Weekly Euro USD Analysis

Price Reversal

Triangle Consolidation

The weekly EURUSD Chart

shows the striking monthly low of January 2012. The Euro is currently trading at this striking low combined with the down sloping weekly 20 Simple Moving Average (SMA), which both is likely to act as resistance.

Weekly Euro US Dollar Chart Analysis
Weekly EUR/USD Chart Analysis

On the 1 hour chart we see the recent price breakout to the upside out of the large triangle consolidation pattern. The EUR/USD price moved up to the first butterfly sell target (127 %), which coincides with the daily R3 and monthly R1 Pivot Point resistance.

The confirmation of the butterfly pattern would implicate a larger price reversal below the recent triangle consolidation pattern. Thus, the prior market price breakout through the upside would get completely reversed - failed breakout. The price target of the butterfly sell chart pattern is normally the 161 % Fibonacci target - see popular chart patterns.

127 % butterfly target
1 hour Butterfly pattern, Triangle Breakout 

The 5 min chart below shows the price reversal at the resistance level. The failed price breakout candles might be seen as a evening star pattern. After the initial price reversal market created a typical three wave consolidation pattern and later a small bear flag before the Euro continued the downtrend to catch the stop orders below the recent striking low - Stop Running. Often a small price retracement occurs after the penetration of an important chart level like the recent striking low to catch also some stops of the breakout traders.

evening star pattern, stop fishing
5 min False Breakouts

Fibonacci and Pivot Analysis

Consolidation and Continuation Chart pattern

Fibonacci Retracement and Extension

The two green ellipses are consolidation pattern, which acted as continuation chart patterns - Flag and pennants. The consolidation price zone of the first Consolidation/ Continuation Chart pattern (green circle) acted as support as market price tested this price zone of 1.2460 again. This support zone got strengthened through the 61.80 % Fibonacci Extension level of the recent swing and the 61.80 % Fibonacci retracement level.

The Euro moved up to the price zone of the black circled Consolidation pattern, which looks similar to a small Head and Shoulders pattern (H&S). As often, the first retrace into a price zone of a prior consolidation held the first test and the EUR/USD moved strongly down again to the daily support level (pink line). The Euro consolidated for a while after hitting the daily support before the second strong leg down moved price to the Daily Pivot Support. From there, the EUR/USD bounced strongly up above the recent daily high to clear some stops and fool some breakout trader.

The failed first breakout often occurs due clear the stops and fool some breakout traders at striking chart levels like market highs and lows. This manipulative triggering of market orders is also visible on the further price action on the chart, whereby the weekly R2 held the market drop in the beginning of the US trading session.

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EURO USD Analysis
5 min EURO USD Pivot Points and Fibonacci

Butterfly buy pattern

Fibonacci Price Targets

161 % Fibonacci Extension target and 61.80 % Fibonacci Retracement

Butterfly Buy Pattern on 5 min chart.

On the 4 hour chart of the EUR/USD we see that market price found support at the 61.80 % Fibonacci retracement and the daily S1 Pivot. From there, the Euro moved up to the 4-hour 10 Simple Moving Average (SMA) and the daily and weekly Pivot point resistance, where price started to slightly retrace back.

EURUSD chart analysis
4-hour Fibonacci  Retracement

The 5 min Euro Chart below shows the development of a Butterfly buy chart pattern, which led to the sharp price reversal visible on the 4-hour chart.

The large black circle shows the butterfly pattern -three wave consolidation-after an impulsive move. The Euro passed the minor/ first butterfly buy target at 127 % Fibonacci Extension of the consolidation pattern and market price moved further to the final 161 % Fibonacci level of the Butterfly buy pattern. From there, the Euro reversed sharply to the upside and market reached the 161 % Fibonacci Extension of the whole swing from the high of the consolidation pattern/ Butterfly pattern to the market low.

In addition, the 161 % Fibonacci Extension level at the market bottom, which usually acts as the buying opportunity in the butterfly buy chart pattern, also coincided with the 100 % Fibonacci Extension level (of the recent swing down prior to the consolidation pattern moved to the high of the consolidation pattern).

Furthermore, the final 161 % Butterfly target coincides with the weekly Pivot point. The daily Pivot point might have acted as further resistance zone.

Butterfly buy pattern
5 min Butterfly buy pattern

Fibonacci Retracements and Fibonacci Extensions

Important Fibonacci levels

61.80 Fib Retracement | 61.80 % and 100 % Fib Extension levels

Understanding Fibonacci Analysis

The charts below show the importance of the Fibonacci Analysis, which consists of Fibonacci Retracement levels as well as Fibonacci Extension levels.

Fibonacci Retracement levels highlight some important price levels during the retracement of a recent swing, which could lead to some price reaction. The 61.80 % Fibonacci retracement is the most important price retracement level (IMO).

The Fibonacci Extension level is the complete price range of a recent swing moved to the highest retracement level of this recent swing to target important price levels during the next impulsive leg, Hence the Fibonacci Extension levels can be drown when the retracement of the recent impulsive swing has terminated. The deepest price retracement level is the price point where the complete price range of the recent impulsive swing gets plotted on to show hidden Support/ Resistance levels. Important Fibonacci Extension levels are the 61.80 % Extension and the 100 % Extension. A minor Fibonacci Extension level is the 161 % level.

The Fibonacci Retracement gets employed first to find important price retracement levels when a recent swing is getting retraced whereby the Fibonacci Extension gets employed when the retracement terminates and a new impulsive leg starts to find important hidden support/ resistance.

On the 1 hour chart below we see that the 100 % Fibonacci Extension from the first leg down plotted on the beginning of the next leg down marks the price zone, where the EUR/USD found hidden Support after market breached the daily S2 Pivot.

fibonacci extension
1 hour Fibonacci Extension

On the 5 min chart below the 61.80 % Fibonacci Retracement provided resistance to the price retracement of the larger leg down (blue arrow). Further, the leg down consists of three minor swings/ waves down,  whereby momentum was fading away with every new swing. The retracement of the first leg down started at the daily support level (pink line) after market failed to break the daily S2 Pivot.

euro us dolar chart analysis
5 min Fibonacci Retracement

Triangle Consolidation Pattern

Triangle patterns

Typical Triangle Consolidation pattern

Consolidation price zone

On the 5 min chart below we see the large triangle consolidation pattern, which got broken to the downside.
The market price of the EUR/USD moved down to the 61.80 % Fibonacci Extension and started a retracement back into the triangle consolidation price zone.

The Consolidation price zone of a recent consolidation pattern often acts as Resistance/ Support when market price retraces back into this price zone for the first time. So, the Euro retraced back up into the triangle consolidation price zone and market price rolled over to the downside most probably due to the recent consolidation chart pattern.

The Euro terminated its retracement and started its second leg down. The following typical three market swing consolidation pattern  between 11 a.m. and 1 p.m. GMT took as usual more time then the prior impulsive leg and the consolidation pattern also consists of three market swings. The consolidation pattern terminated after the third market swing of the consolidation pattern and market price continued its move down to the major Support zone of the monthly Pivot and daily S2 Pivot, from where market price finally bounced back to the upside.

euro us dolalr chart analysis
5 min Triangle Consolidation Chart Pattern

Another Example of a Triangle Breakout 

Butterfly sell chart pattern on 5 min chart

The Triangle breakout

occurred with the beginning of the new hourly candle after the previous hourly candle closed exactly at the downward sloping upper resistance trend line of the triangle (Breakout Timing - red thick circle).

The Euro found resistance at the daily R1, which coincided with the 161 % butterfly sell pattern on the 5 min chart below. The Euro retraced down close to the typical 161 % Butterfly sell "book" target of this reversal pattern, which coincided with the daily Pivot Point.

The Fibonacci Analysis allowed to figure out support and resistance zones on the EUR/USD. The green ellipses mark Consolidation and Continuation patterns. If price retraces back into the price zone of the prior consolidation pattern then market price often temporarily finds Resistance/ Support at these chart price levels.

triangle breakout
1 hour Triangle Breakout

Butterfly sell pattern
5 min Butterfly sell pattern

Next Example from June 2012: Triangle Consolidation 

triangle breakout, ending diagonal
1 hour Triangle Breakout

On the hourly chart we see that the Euro formed a nice 3 wave triangle consolidation pattern (red triangle) after the explosive up move out of the ending diagonal triangle (blue lines). After the consolidation terminated the Euro slowly moved up from the daily pivot point (no confirmed close below it) supported by the 20 SMA (purple line)  and later by the 10 SMA (red line). Market respected (closed at) the weekly pivot at 12 a.m.GMT before the Euro broke through it at the beginning of the 2 p.m. hourly candle. Market moved up to the resistance zone at about 1.25 due to the 61.80 % fib retracement (swing down from 28th to June 1st), the previous low of May 25th (pink line), the 61.80 % fib extension (A-B at C), the 200 SMA and the daily R1. Market could not break this resistance zone so far.

Triangle Pattern in the EURUSD

triangle pattern chart analysis
1 hour Triangle pattern
On the hourly chart we had a nice triangle consolidation (blue lines) after yesterdays drop down, which, as mostly, is a continuation pattern. The triangle pattern took place at the 100 % fib extension at about 1.2706 from the prior wave down.
The triangle breakout occurred in today's European Session and it took out the prior low (minimum target of the triangle).
The weekly S3, the daily S2 and the 61.80 % fib extension at 1.2641 could provide some support.

triangle pattern chart analysis
5 min Chart Analysis 

On the 5 min chart we see that the 100 % fib extension from wave A-B at C at about 1.2756 acted as resistance yesterday. Furthermore, the sharp drop in price yesterday (D-1.2688) found support at the prior consolidation.

The breakout of the triangle occurred shortly after market touched (respected) the blue support line at 10 a.m. GMT (hourly candle). After the touch of the hourly candle the triangle support line got weaker and the break occurred in the beginning of the next hourly candle (11 a.m. GMT).
After market respected a level with the touch of a candle (particularly when the candle closed at this support/ resistance level) the next candle has the chance to break through this level either for a true breakout or for stop fishing the stops placed below the support/resistance (Timing).

The breakout candle on the 5 min chart at 12:25 a.m. GMT fished the stops placed below the recent low and daily S1. However, there was no close of the succeeding candles below the range of the breakout candle (no confirmation, so mainly stop fishing).

Clearing of stop and limit orders

Forex Stop Running

Stop and limit order clearing through false breakouts

Today, in the Asian session the Euro triggered/ cleared the stop and limit orders above the high of last week and then started to retrace back at the daily 61.80 % fib retracement and the weekly 10 SMA.

The solely clearing of stop and limit orders at striking price points like market lows and highs is a typical manipulative market behavior and price target of the Forex Manipulators particularly at the first test of these levels with all the stop and limit orders there - false breakouts/ non confirmation.

Daily Chart analysis Euro
Daily 61.80 % Fibonacci Retracement

On the 5 min chart (below) we had two pin bars which closed in the price range of the preceding 5 min candle (price rejection/ non-confirmation). Both pin bars led to a reversal, whereby the first pin bar cleared the stops below the recent low which often increases the chance of a price reversal - stop clearing accomplished.

We also had a kind of Head and Shoulders pattern on the 5 min chart. The market reached the Head and Shoulders target (neckline is the brown line).

pin bar, Head and Shoulder pattern
5 min pin bar, Head and Shoulder

Stop Runs during News release

News releases in Forex

Stop Running

Stop run (shakeout) to the upside after daily bull flag got triggered and market took out the recent daily high. The Euro found resistance at the low of June 28 at 1.2407 and the weekly 10 SMA at 1.2409. After taking out the stops above the high of July 27 at 1.2390 the Euro reversed strongly (Stop clearing accomplished...). The Euro currently found some support at the daily S2, the 38.20 % fib extension from the recent hourly swing down (not shown) and the price zone of the consolidation from the 26th of July.

Yesterday, we had a potential H&S (tricky pattern) on the hourly time frame.

Particularly on the 1 min chart we see how the Fibonacci study could help to anticipate support and resistance.

head and shoulder, news trade, shakeout
1-hour Euro US Dollar Chart Analysis

shakeout,momentum trade, chart analysis
5 min Eur/Usd Dollar Chart Analysis
momentum trade, chart analysis
1 min Euro Dollar Chart Analysis

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