here’s the updated 4 hour chart of the EUR/USD showing a breakdown where expected, so that helps affirm the placement of my preferred target (T2) as the pattern measurement lines up exactly with where i’d expect prices to find price support before we are likely to get a substantial bounce. that also brings up something that i should clarify: on this chart, for example, i have several horizontal lines. these are all levels that i consider to be significant support but as you can see, i labeled the first 3 lines as S1-S3 (1st support, 2nd…) and the next two are labeled as T1 & T2 (1st and 2nd targets). basically, this means that i feel that we may or may not get a reaction (bounce or pause) off the first 3 support levels and even if we do bounce, it would probably be pretty shallow and not worth attempting to trade. the targets (T1, etc..) are where i would expect larger reactions (bigger bounce or longer pause) and those levels may or may not provide more nimble traders an opportunity to reverse a trade (from short to long for the bounce).
another way that i view my targets are that i expect, ASSUMING the pattern has triggered, that the first target has a very good chance of being hit. the next target (T2) might have a slightly lower chance of being hit and so on (with T3, etc…). I will often post ahead of time which target i favor being hit, even if it is one of the higher targets. depending on various factors at the time, i might also trade around those targets by temporarily reversing the direction of my trade (long to short, etc..) to play a bounce off those levels. however, my trading style may not be suitable for others nor do, or can i give any advice on what someone trades or how they trade it. as always, DYODD and trade according to your own trading style and risk tolerance.
the first chart below is last night’s EUR/USD 4 hour and the 2nd is today’s updated 4 hour chart with those additional early support levels. often, a breakdown or a breakout in the EURO or the $USD can give you a heads up on a breakdown or breakout of the broad markets. in this case, we have some, but not all primary equity indexes having broken down from 60 min patterns while the others still remain in their uptrends, albeit very close to signaling a breakdown. there are no guarantees in the market but i would put very good odds that if this EUR/USD pattern continues to unfold as i expect, then a breakdown of all of the key equity indices is imminent.
