In this article, I explain developments in the EURUSD Triangle Setup illustrated in my initial post today. Today’s New York Session didn’t have adequate bullish pressure to break upper resistance that would have initiated this setup. So, we are now waiting for upper trend line resistance to break in tonight’s London Session.
Below is the triangle in which the EURUSD is currently consolidating.
In this chart two triangles are visible. I am using price action behavior in the first triangle as a guide on how to approach this second triangle.
Looking at the First Triangle
When the upper trend line was breached in the initial triangle, there was directional bullish momentum that played out through both the New York Session and the the London Session.
In the charts below we will take a close look at exactly how price acted at the break of this initial trend line, in a couple different time frames, to clearly see how to play the break of the upper trend line in this newly formed second triangle.
1 Min View: Break of the First Triangle’s Upper Trend Line
Below it is visible that once upper trend line resistance was breached, price pulled back and tested it as support before the rally initiated. It is important to note that it took six minutes for the break of resistance and re-test as support to play out before the market moved roughly 50 pips in 1 Min.
These setups happen very quickly, so it is important to do this analysis on the front-end.
In the chart below, we see again the same 1 Min. view, zoomed out to give perspective of the most recent previous high. With the break of this previous high, bullish continuation is further supported.
Criteria needed to consider a bullish position:
- Break of the upper triangle trend line
- Break of the most recent high
Below is the same chart as above in the 5 Min view…
Below is the 15 Min. chart that shows continuation of bullish momentum through the London Session, which picked up an additional 123 pips over the 184 pips gained in New York.
4 Hour Stochastic is crossing now above the 25 line after being oversold, which helps support the bullish bias of this trade.
Please note the Monthly, Weekly and Daily Pivots in the chart below that must be break in order for this trade to be further validated.
We are currently below Monthly R1 at 1.12270, the Weekly Central Pivot at 1.1222, the Daily Central Pivot Point at 1.1221, Daily M3 at 1.1237 and Daily R1 at 1.1254
If this 4 hour trend line breaks in London tonight or New York tomorrow, these are the resistance levels that must be considered as this trade rallies to the upside…
For further information on this setup, please review my initial FOREX.TODAY post today on the EURUSD.
Gratitude to Wayne McDonell for guidance and insight on tracking larger time frame moves.
US Dollar Analyst, FOREX.TODAY