Thursday’s Top 3 Forex Chart Setups
Mark Whistler is the founder of www.WallStreetRockStar.com and is the author of multiple books on trading. Mark’s newest book, The Swing Trader’s Bible – co-authored with CNBC/Fox News regular guest Matt McCall – will be on shelves in late summer, 2008. In addition, Mark also writes regularly for TraderDaily.com and Investopedia.com.
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Top Chart Setup #1:Â Textbook Elliot Wave in Action
Here’s an example of text book Elliot Wave Theory… The EUR/USD (euro and U.S. dollar) began falling on Sunday this week, after investors realized that the price of oil could begin falling, after hitting a short-term top. What’s more, German consumer sentiment, coupled with comments from U.S. FOMC policymakers regarding interest rates helped add additional fuel to the fire.Â
Regardless of fundamentals, the EUR/USD recently completed the 5th wave in the relevant Elliot Wave trend. As the chart shows, those who were savvy enough to recognize that the 4th wave was in place (last night) were able to ride the 5th wave down.
Now, the EUR/USD could consolidate, putting in A, B and C waves laterally, before instigating another sell off. Consolidation within the present range is expected, but a breach of 1.5500 could have the EUR/USD off to the races again. Anything is possible at this point; however, sellers have certainly been flexing their muscles lately.
Top Chart Setup #2:Â Momentum Setup for Breakout Traders
Looking at the daily chart of the USD/JPY, we see that the greenback has been gaining ground on the yen over the past three sessions. Now, the dollar is sitting right at critical resistance of the relevant wedge. A move above 106.00 could have momentum players chomping at the bit for higher ground. Confirmation traders may want to wait on the sidelines for a few, as a head fake could still ensue; however, at present, bulls are certainly attempting to make their presence known.Â
Top Chart Setup #3: The Pounded Euro
Just today, the euro appears to be losing major traction against the pound, as seen in the daily chart failing 4-month ascending support. What’s more, the chart clearly shows that a double top has been put in…
Should the euro continue it’s downside run against the pound – breaching 0.7800 – supplemental bears could begin showing up out of the woodwork. Traders will definitely want to keep an eye on this chart for unmistakable momentum moves over the next few weeks.
