Ending Diagonal Triangle

Ending Diagonal Triangle

Wedge Pattern

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

Price shakeouts of weak hands

Forex Chart Patterns

4-hour Euro Dollar

1 hour Euro Dollar

5 min Euro Dollar Chart Analysis

Consolidation Patterns

Weak hands getting shaked out in Trading

The Euro moved up to the1.2329 resistance level (purple line-October 2008 low and 20 SMA on the 4-hour chart) and from there market resumed its down trend and the Euro created a new daily low.

On the 5 min chart (below) we see that consolidations very often consists of three swings (red circles). One of them occurred in the Asian session between 2 - 3 a.m. GMT and after termination market moved to the 100 % fib extension. Another one occurred at about 10 a.m. and this consolidation is also the left shoulder of the Head and Shoulder pattern on today's market top, which took place at the 4-hour 20 SMA and the October 2008 low (purple line). The right shoulder is also a three swing consolidation and after termination the Euro penetrated the brown neckline. However, market consolidated below the neckline and slightly penetrated the neckline to the upside again. A reversal (failing of the H&S) or at least a shakeout got more likely due to the length of the consolidation below the neckline (Good trading opportunities at important levels/ pattern termination normally do not give much time for positioning as it is recognized by many traders and thus triggered fast).

The lengthy consolidation followed by the upside break of this consolidation through the neckline led to a kind of shakeout of the weak hands. The Euro found resistance at the 20 SMA on the 5 min chart and the price zone of the prior consolidation (right shoulder) so that the Euro resumed the down trend and triggered the H&S pattern. The 1 a.m. hourly candle triggered the stops below today's (green line) and yesterday's low (blue line) but the candle closed and formed a bull flag (on 5 min chart) at the recent hourly low at 1.2281 (blue line). The bull flag (blue circle) got triggered and market moved to the daily pivot and the 100 % fib extension on the 5 min chart. From there, the Euro resumed its down trend again. The 2 p.m. hourly candle closed at the daily S1 (red circle on hourly, weakening this level) and the following hourly candle starting at 3 p.m. moved below it and closed at Monday's gap opening at 1.2253 (brown line). Another timing setup occurred with the start of the new 4-hour candle at 4 p.m.. The Euro terminated it's three swing consolidation pattern on the 5 min chart at 3:45 p.m. (red circle) and market moved lower again after the previous 4-hour candle closed and weaken the gap opening support (brown line). However, the Euro did not confirm the breach of the prior consolidation low at 1.2245 (green circle) and the Euro reversed and the 4 p.m. hourly candle closed at the gap opening (brown line). Market is currently consolidating around this level.

The pin bar at 8:25 a.m. after the penetration of the 1.2288 level (pink line-low of June 1st) led to a non-confirmation of the break and the Euro moved up again after the bull flag just above the pink line. A hint for the continuation was the close of the 9:20 candle at/above the daily pivot with the confirmation of the following 5 min candle.