For educational purposes, I have highlighted the components of the successful 4 Hour setup that concluded in today’s New York Session.
4 Hour Setups are very powerful in FOREX.
The Components of This 4 Hour Setup
- The Daily Trend on the EURUSD was Bullish
- The 4 Hour Trend was Bearish
- There was a Break of the 4 Hour Bearish Trend Line
- There was a Break of the 4 Hour Previous High to form a new Higher High
- The EURUSD pulled back to form a new 4 Hour Higher Low
Here is the same image enlarged…
This is the EURUSD as it was just breaking out from the 4 Hour bearish trend line last week.
This is the EURUSD forming its first 4 Hour Higher High.
Another important note, when the EURUSD broke from the 4 Hour Bearish Trend Line, there was a period of consolidation where the pair didn’t form a lower low and the 1.11500 level held as support. On the chart above you can see five candles with minimal price action ; this was a full day of consolidation.
Here is another example of this setup playing out on the USDJPY in the 5 Min view
Here is one more example of this setup in the 4 Hour view on the EURJPY from early March 2016.
You can drag the images from this article to your computer to enlarge.
Much appreciation and gratitude to Wayne McDonell for teaching me how to track and trade these larger time frame setups. Very good stuff Wayne.
U.S. Dollar Analyst, FOREX.TODAY