Typical Consolidation Pattern

Consolidation Analysis

Consolidation patterns with three waves/ swings

1 hour  euro us dollar chart analysis

Bull Flag and  Triangle Consolidation Pattern

Yesterday at 12 a.m. GMT, EUR/USD broke through the triangle bottom but did not confirm the breakout of the low and reversed.

The EURO found resistance in the middle of the price zone of the triangle consolidation pattern (red circle above) and the price zone of the tight consolidation. Market price went down again till today at 7 a.m. GMT.

Market bounced from the strong support zone at about 1.2641. From there, the Euro went up to the Pivot point, consolidated there (Bull flag) and broke through.

Today's price action might be seen as an inverted Head and Shoulders pattern where the brown neckline got broken in the European session. Recently a second bull flag was formed and market broke out to the upside.

5 min Typical Consolidation Pattern

Typical Consolidations

On the 5 min chart, we see that the two consolidation pattern formed the typical three waves/ swings consolidation pattern formation before the uptrend continued.

The EUR/USD found resistance at the 100 % fib extension from today's up move from the support level at 1.2641 to the neckline moved to point a at 1.2736, the 61.80 % fib extension (a-b at c) at 1.2736, daily R1 and the 127 % butterfly target (127 % from b-c at c). This confluence resistance zone hold the market (red circle)  and market went down to find some support at the middle of the price level of the prior consolidation pattern at 1.2710.

Timing in Breakout Trading

It is important to recognize when the breakout of the consolidation pattern occurred (Breakout candle 1,2).

Both price breakouts occurred at the beginning of a new 4-hour candle (12 a.m., 4 p.m. GMT). If you

4 hour Breakout Timing

observe the 4 hour chart then you also see that the 10 SMA and the 20 SMA provided resistance.

The EUR/USD respected these level but with the beginning of the new 4 hour candle (12 a.m. and 4 p.m. GMT) these resistance zones got weaker (already touched) and market broke through it right at the beginning of both new 4 hour candles (Breakout Timing).

The second breakout (4.10 p.m. GMT) did not get confirmed as the succeeding  5 min candles did not close above the range of the breakout candle (no confirmation on the 5 min chart after the breakout of the consolidation - green line).