Online Trading Chart Patterns in Forex, Stock, & Indexes

The cable has reached the 34EMA low which is the bottom line of the Wave on the daily chart. When the market cycle is down this is typically a great point at which to initiate a short position.

Normally that’s the plan BUT…The cable can be a bit of a drama queen can’t it?

Look closer at the daily chart and it’s apparent that prices can and have climbed up into and through the resistance of the Wave before selling off.

So rather than play a swing short off a bounce (sell strength in an overall downtrend) it may be wiser here to short a breakdown: Enter the four hour chart!

The play would still be a short but the rising wedge pattern on the 240 will set up a reversal short — as opposed to a swing short on the daily (below) — and take advantage of momentum to the downside

The set ups are coming quickly across multiple time frames on the USD/JPY.  Chart patterns are pointing to a breakout.

The 30 minute chart has a forecast region that begins just below the 90.00 major psychological level.

The momentum on the 30 is carrying through to the 240 minute chart as the down channel is poised to break the downtrend line resistance and here’s where is gets interesting:

Patiently waiting just above the intraday chart breakouts is the daily chart swing short which would trigger between 89.95 (”step out in front of size”) and 90.20 (minor psychological level and Wave low).

So short term I’m bullish, especially with the Dow up 160 this morning.  Longer term I am bearish unless or until price get north of 91.80 to 92.05.

The Dow has found support as buyers are stepping in just below the key 12,000 level.  Support extends down to 11,800 as this is the prediction region for this daily chart triangle pattern breakdown.

The 12,200 level was the trigger point for the short and weakness as the uptrend line support of the asymmetrical triangle was broken.

The January 22nd low of 11,465 will be watched  closely as tomorrow Fed announcement and expectation of a 50 to 75 basis point cut is widely expected.  Since the Fed had a surprise cut on Sunday of 25 basis points, a 50 basis point cut would factor into the picture.

JP Morgan bails out Bear Sterns: Triangle Chart Patterns Featured.

Ofcourse the Dow is likely to rally on this informtaion once the weakness and worries in the financials is calmed.  The Bear Sterns bailout at 2 bucks a share is not a bad deal for JP Morgan (JPM) and while Bear Stearns is getting the worse end of this deal, it was pretty much going to be a single-digit number or bankruptcy. 

There are two Autochartist alerts that are of particualr interest in the light of the financial services sector meltdown.  Both Bear Sterns (BSC) and JPM broke down from symmetrical triangle patterns well before today’s major sell-off.

This is one of the major keys to playing price action:  The patterns will lead the news.  This is exactly what has happened here.  Traders watching price and patterns were well-positioned for today’s sell-off.

Autochartist chart pattern alerts below:

Tonight at 10:30pm EST the RBA will release its decision and statement on rates.  The AUD/USD is currently poised to make a run at 0.9100 and with the expectations of rate hike (.25 basis to 7.00%) the level could surely be expected to be broken to the upside.

The interesting scenario becomes if the rates are not hiked at the current wedge is tested to the downside breaking the short term intraday uptrend.

We’ll have to play this pattern to both sides (like all rising or falling patterns) and if the continuation fails, then be ready for the support uptrend line to be broker and play the reversal. - Corey, Autochartist U.

For a free 21-day trail of Autochartist, click here.

Autochartist chart patterns scan on the 240 can be very helpful this time of year to avoid getting caught up in the volatile holday trading.

There are quite a few set ups on the four hour charts and I like this because I have the perfect balance of intraday and end of day with this particular timeframe. 

In fact I have set up a specific 240 minute interval scan on my Autochartist so that I can get alerts for this interval as they appear.

I won’t forget the daily charts either but just remember that the risk tolerance for daily is higher than a 240 which I why I prefer the 240.

The daily chart of the EUR/JPY is following through on the turn lower and is now looking at the 160.00 major level as the support here on a relatively quiet day is holding.  The remainder of the week will not be so quiet. 

Today is the only day without big economic releases.

The USD/JPY is heading lower towards 108.00 again.  Prices did head below this key level but quickly found buyers. 

The downtrend on the 240 is not as steep as the daily chart but the set up with the falling wedge does offer a number of potential entries depending upon what prices do from here.

The EUR/USDcontinues to climb higher and 1.5000 seems inevitable.  The level is dependant upon the continued U.S. Dollar weakness. 

Support is at the lower uptrend line and 1.4750. 

It’s not unusual to get mixed signals as prices rise to significant highs or lows.

Today is one of those days as the dollar has sold off from the bounce to 76.00 and has been — as expected — sold off and nearing prior support at 75.00. The dollar was able to stay above the “00″ after attempts at 76.14 and 76.15.

The 74.97 low was set on November 9th.

The EUR/USD has pierced the 1.4800 to a high of 1.4814 but quickly sold off as the dollar found support at 75.22 - just two ticks from the “20″ minor psychological level.  Now trading below the 4800 level, the EUR/USD is pulling back slightly as there is no clear signal that the dollar is ready to tackle 75.50.

Interesting though is the break on the 30 minute chart of the EUR/USD.  Prices has broke the uptrend line support of a rising wedge.  This is an aggressive short entry with current support holding up prices at 1.4780.

The Dow has given the carry trades some reprieve this morning as the Dow is up +94 points an hour into the trading day. Prices have once again been pushed up through 13,000 but a look at the daily chart clearly shows that the Dow has a steep climb ahead to break the downtrend.

Why is the market up today? Crude is up +2.00 and XOM is up +3.10 along with it. Following suit, the dollar-yen found support at the 109.80 minor psychological number and has found buyers up through 110.00.

The 110.50 to 110.60 area will be watched closely for upside follow through in the USD/JPY as most intraday resistance is waiting there.

A couple other charts to look at while the dollar sits at 75.37 today, down -0.40 are the USD/CAD and USD/CHF.

The intrday 30 minute dollar-canada is trading within a symmetrical triangle with 0.9750 support to the downside and resistance at 0.9850.

The dollar-swissy is testing this morning support at 1.1067 with resistance at 1.1100 overhead — which if broken could trigger a break of the falling wedge pattern. (shown below)

Talk is cheap but in this case, all the bullish talk about the U.S. Dollar has formed a neat term support level at the 75.00 psychological level.

Nothing has significantly changed between last week and today yet the dollar is poised to test 76.00 today - albeit in lower volume.

Every bounce in the dollar has been sold on strength and there’s little reason to think this bounce is an exception even with the talk of central bank intervention.

Fed Fund futures are still factoring a better than 60% chance of a December rate cut and the last week’s sell off in the stock market certainly stirred up more talk of rate cuts. Currently the Dow Jones has found buyers just above the key 13,000 level.

However, we must be ready if the 75.00 level does prove to be a bottom from which longer term support will be built upon.

Keep an eye on the 77.50 to 78.00 area as this is where a shift from weakness to strength will be made on the daily chart. Anything below the 77.50-78.00 level can be considered a correction and not a reversal.

Playing this bounce can allow USD/CHF, EUR/USD, and GBP/USD traders to play corrections.

The 76.00 level on the U.S. Dollar Index is primed for selling pressure and again, until there is a change in the dovish talk from Fed the selling pressure will return.

The upside target for the EUR/USD is 1.4700 if the 76.00 level proves to be too much for the dollar.

The USD/CHF set up could benefit from further strength or 76.00 dollar resistance.  The downtrend line resistance will be the decision level from an entry.

The U.S. Dollar Index shorts remain undeterred. Friday’s 76.20 low remain intact however the sideways movement on the intraday chart hardly screams “bull” so before entering an ill-fated entry based on the expectation of a Dollar rally, keep a few things in mind.

The U.S. Dollar Index is still trading lower on the 240 minute and daily charts with resistance waiting not only at the psychological 76.50 and 77.00 levels. Any move higher between current prices and the 78.20 level will only be corrections within the overall downtrend. A reversal of the bear can be considered above 78.50.

In the meanwhile the the backdrop of Chuck Prince’s departure from Citigroup has Dollar bears thinking that the Fed will continue printing cheap money to help the banking crisis still suffering from the credit hangover.

Lower interest rates are expected because of this and this ofcourse would continue to point to a weaker U.S. Dollar.

The EUR/USD will continue to rally as long as this is the expectation in the market.

This morning’s action on the EUR/USD certainly reflects this as the 1.4500 was broken to the upside. The break was not sustainable at the time but the retracement was not one that would dissuade Euro bulls from pushing prices higher again. Current support waits between the 1.4450 psychological level and 1.4440. The pullback from the morning’s high was supported as 1.4441.

Don’t underestimate the 1.4450 support level and don’t be to aggressive to short the EUR/USD unless it convincingly can break the “50″ pip.

The 240 minute chart continuation rising wedge pattern shows the support at the EUR/USD climbs to even rarer air as the 30 minute chart triangle breakout followed through. EUR/USD strength also points to shorting opportunities in the USD/CHF (see chart alert below).

The U.S. Dollar continues to sink to support as the FOMC decision on rates looms.

There are quite a few things to consider when noting the slide to current support at 76.788.

There is not assumption that the dollar will gain strength any time soon.   A 25 basis point cut is largely discounted into the U.S. Dollar Index.  Remember that a 50 basis point cut is not out of the question as that too has been factored into the dollar - albeit to a lesser degree.

Bernanke does not seem overly concerned (based on his statements and past actions) that a weak dollar will lead to inflation and add to that he is battling with a weaker housing market and mortgage debacle.  A 50 basis point pro-active rate cut is not unusual as former-chairman Greenspan has used this in the past instead of two 25 basis point cuts.

Any cut is also going to benefit U.S. exports which are already enjoying the weakening dollar - and this further strengthens the rate cut argument. Regardless of the result there are set ups that are currently forming in front of this important decision on rates.

This is also supported by the U.S. Dollar Index price action which has been swiftly sold as each bounce during the downtrend; most recently at the pierce of the 78.00 level on October 20th during the day long dollar rally.

The dollar weakness continues to push the cable higher as the rising wedge on the daily chart continues upward.

There will be resistance up past the 2.0625 level at the July 24th high of 2.0654.  Any move beyond that is a new 12 month high.

The USD/CHF is moving lower within a falling wedge as it finds support at 1.1600.  Any bounce can be shorted between 1.1720 and 1.1750.

There’s also a beautiful head and shoulders pattern that has formed on the GBP/JPY daily chart.

All charts we used with permission from Autochartist.

The S&P500 has rallied above the 1,500 level and is currently trading at 1,503.45.

The rally above 1,500 is significant as the psychological level of 1,500 would have been resistance.

The next step is  to see whether prices can rally up through the downtrend line resistance of the channel down pattern that has developed on the 30 minute chart.

The follow through would be as prices trigger through 1,508.