Before I get into why, let's put things into some context. The way I trade is to always know what is happening overall, i.e., the BIG picture. Right now, this pair is in the consolidation phase after finishing a very nice, long impulse phase down. Now, knowing and expecting a consolidation wave, I start looking for back-to-back patterns because that's when you get them: in a consolidation. Advanced patterns work exceptionally well during consolidation. The consolidation wave this pair is in COULD BE unfolding in a ABCDE symmetrical . This is not yet confirmed though I was able to locate the possible upper and lower converging . We'll see if they hold up.
So back to the patterns on my chart. The just finished traced out the wave B of this possible ABCDE triangle and sent prices up in a wave C. The just filled beairsh traced out the wave C and now after being filled could be sending prices back down in a wave D. Now I have identified a POTENTIAL that also just happens would be filled right at/near the lower of this converging . Does this give more confidence to the fact that this consolidation wave is unfolding in an ABCDE triangle? You be the judge. I'm just booking pips! But knowing this simple fact will allow you to better identify the patterns and also the trading opportunities.
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