Multiple time frame analysis of the dollar
Today’s interest rate decision is the dominant focus of this week. Between today and Friday’s GDP number there will be a good deal of “wait and see”. Let’s take a look at three time frames of the Dollar as we await the 2:15pm EST decision.
The short term 30 minute chart shows the sell-off that started during the Asian session about 10:30 to 11:00pm EST last night. This drop through the minor psychological “80” level and then through the support of the Wave was finally caught at the “50”area – a major psychological number.
This area lead to a slight bounce and currently prices are trading up at the 86.60 area. The Wave is resistance and will continue to hold prices down until a rally up through the top line of the Wave currently at 86.64.
The intermediate time frame, the 180 minute charts, is showing consolidation. The triangle pattern that has formed will be closely watched as we approach the FOMC announcement. By this afternoon — if the triangle is still intact — the range will be a tighter 40 pip area between the 86.75 and 86.35. While the 30 minute chart is in a downtrend or at least on the weak side of the Wave, the 180 is in a sideways market and consolidating.
The daily chart shows again another view and depending upon your approach and risk tolerance, there will be different aspects of each chart that may suit your overall approach. It is key to focus on the time frame that best suits you and your approach…not making a particular set up fit a pre-determined time frame.
The daily chart is in an uptrend with the Wave heading upwards acting as support. Although the angle of the Wave is leveling out and shows that the uptrend is not as strong as it was at the beginning of this month, there is still support.
I treat each time frame as a stand alone all while keeping in mind that a trend or congestion that continues long enough will impact the the 60, then the 180, then the 240 and finally the daily chart. Price action rolls from time frame to time frame, shortest to longest. This also means tht each time frame stands alone with it own support, resisitance, trendlines, and technical analysis. Here you can see that depending upon the timefram that you’d like to approach this makret with today, there are three distinct looks, and three distinct set ups. Choice is yours and that is where you inidivdual style and risk tolderance comes in.
*All charts are done on eSignal Premium with the EZ2 Trade Software Collection. www.ez2tradesoftware.com
Raghee Horner is an trader with more than 15 years’ experience in the markets. Ms. Horner has taught her brand of technical analysis and charting strategies to students all over the world. She is also the author of the bestselling “Forex Trading for Maximum Profit” and “Thirty Days of Forex Trading”. Emphasizing charting and price action and continues to teach the tools and strategies that encourage self-directed traders to pursue the study of chart analysis and market psychology. She is a much sought after public speaker who has conducted seminars in the US, Canada, the Caribbean, and Asia. For more information on Raghee’s analysis and trading email cs@raghee.com or visit www.raghee.com.