Dec 9, 2008 - Pause Before The Storm?
“Show and Tell” on Chart Patterns
Lot’s of Chart Patterns are Currently Forming on the Currencies - A brief discussion and then a look at some good examples of Triangle Patterns all setting up at the same time on different time frames.
Furst - let me give you my “two Ameros” on chart patterns. I consider them all to be “consolidation patterns” and have no bias that - for example, an “ascending triangle” is a “bullish pattern” - to me, it could go in any direction. What I look for is the strength of a well formed pattern.
Is it well formed?
If I can show people a chart and everyone quickly recognizes a Head and Shoulder Pattern, that’s a strong signal. If there is lot’s of debate - then it’s weak. Chart Pattern recognition gets fun when you see a pattern forming at the right edge, but not yet completed. Aggressive traders can take a position that the pattern will first form - and then if it does, prepare for the potential price targets.
Don’t Get Bogged Down In Statistics
I debate the statistics some apply to chart patterns. For example: Maybe someone tested 1085 head and shoulder patterns and determined that 83.7% have a probability of completion in a certain circumstance. So what! The 16.3% chance is just another “50-50″ coin flip if you are only looking at statistics. Well - let’s just say that I can disprove anything with statistics..
US Dollar - Canadian - Dec 9, 2008 - 4 Hour Chart
USD-CADVery Strong Triangle Pattern forming on the Dollar - Loonie. Note the multiple areas where the upward trend Channel has held - and the Resistance forming a classic Triple Top. (click to enlarge)
Euro - US Dollar Daily Chart - Dec 9, 2008
EUR-USD: No Shortage of Chart Patterns Here as we have a pretty good triangle pattern, with a consolidation zone inside. Note the Upward Trend Channel that will be brought into focus on a 30 Min chart Below
EUR-USD: 30 Minute Chart of EUR-USD Shows the Upward Trend Channel and Resistance Levels (Click to enlarge)
US Dollar - Swiss
USD-CHF: 2 Hour Chart Dec 9, 2008 - Nice Triangle to complement the Euro-USD Pattern (Click to enlarge)
Aussie - US Dollar - Dec 9, 2008 4 Hour Chart
AUD-USD - 4 Hour Chart - Yet Another Triangle! - (Click to enlarge)
The Week Ahead - Calendar and Webinars
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Jerry Furst is an active trader, educator, and Founder of Investors Education Network (IEN), He is a Mentor and Trading Coach to Select Clients Click Here for a Free Self Evaluation Survey.