Hey all, Duane here, aka DRFXTRADING, how's it going?
In this thread, I'm gonna be showing my Daily Video Analysis of the Currency Market using Candlestick Patterns/Price Action. The focus is on the Daily and 4 Hour Charts where these patterns are clearer and offer larger Pips per trade. However, the patterns, rules and signals that are seen on these time frames are also seen on the Lower Charts and can be used for improved trading success for Day Traders as well.
Each video looks firstly on the Daily and 4 Hour Charts where I try to identify any Swing Trading opportunities. I then move down to the 30 Minute Chart to see what is taking place during the day. I also take a look at the major any Economic Announcements and identify if any of them will impact the direction of the market.
In this video, I took a look at what was happening with the USD JPY
The pair had provided a strong Bull Candle Signal on its Daily Chart above the Range that was within a larger Pennant Consolidation. Although this was likely to lead to a rally, there was an important technical factor that led to a brief pullback which would have prevented the pair from an immediate bull move.
If you were lucky to have avoided this pullback, you could start buying as it turns bullish once more. Between its current price of 121,52 and the Resistance, it could offer you 50 Pips.
Some traders would have entered short after seeing the Double Tops appear above Resistance. With entry at this area and a target set for the Support, they could be now be earning close to 300 Pips from this trade. For others who waited for the break inside of the Resistance for added confirmation, they could be up between 90 to 200 Pips.
False Breakouts take place all the time with Consolidation, and the Double Tops/Bottoms are common signals that lead to these sharp moves.
Once the Support is hit, there are three possible scenarios that could unfold..
Last edited by DRFXTRADING; 05-28-2015 at 11:48 AM.
I had anticipated that a pullback was going to take place on this pair as it had reached the Breakout Equivalent of the Pennant.
As can be seen in the graph below, this pullback has now started with a few bullish candles.
This Breakout Equivalent is something you will see across the market. All Consolidations break towards these targets before either pulling back to start an opposing trend or pausing before resuming the current trend.
In the case of the EURO USD, given the predominant downtrend, we are likely to see another bearish signal that signals continued gains for the USD in the weeks ahead.
This Breakout Equivalent is a key aspect when it comes to trading Consolidation Breakouts. They are an excellent way of setting our targets ahead of pullbacks.
Aud usd - too close to outer uptrend line for comfort?
We are very close to hitting the major Outer Uptrend Line on this pair, having broken out from several Consolidation Setups. However, whenever the market approaches these major barriers, we usually have a slowdown that makes trading at these areas very risky.
As the market slows down - due to a build up of opposing Entry Orders, the market has a tendency to become erratic as it forms a setup to reverse before actually hitting the Trend Line.
This has happened with the USD CAD and now looks set to take place on the AUD USD as well.
As tempting as these trades can be - since we are 70-100 Pips away, which would be a good trade - avoiding trading here is the better decision.
We are only a rally away from this pair completing the Pennant Setup on its Daily Chart.
As you will see in the graph in the video below, a strong Bullish Break above the Downtrend Line will indicate that we are headed to Resistance. This would complete the Support Boundary as well.
If the Signal is strong enough and is supported by a good setup on the 4 Hour Chart, I will consider trading it according to my Methodology. Given the distance to Resistance, between 150- 200 Pips will be on offer.