As all traders should know, the power of the trend is very mighty…
And this force could be ready to be unleashed on the EURAUD!
The EURAUD is known for its big trending movements… When this pair starts trending, then every trader wants to pay attention – very closely.
Establishing when a consolidation ends is often mistimed… BUT when looking at the EURAUD daily chart the moment could be around the corner.
The EURAUD has been moving down nicely in a downtrend channel (blue lines) since January 2014.
BUT price has not able to continue with its down path for the last few weeks. Price has been respecting and bouncing back and forth at a big weekly support trend line (green) and a big 38.2% Fibonacci ratio.
A break below support translates into 1 thing: wide open space below it.
Also notice how the DTT trend indicator at the bottom is showing that the daily chart is in a downtrend (red bars) , but the 4 hour wolrd is in a consolidation (grey bars). All of that information within a blink of an eye!
When we zoom into the daily chart traders also see a classical chart pattern called the bearflag. This pattern is a great method to identify market structure and capitalize on trends or trends continuations.
The break of the trend line can be a daily candle close below the support. A good stop loss is placed above resistance such as the top. And a balanced profit target is the 50% Fibonacci level at +/-1.4030.
As a method to help traders with identifying flag pattern, post a comment down below with a screenshot of a bear or bull flag and we will provide feedback.
Winner’s Edge Trading, as seen on: