I’ve been watching FX:XAUUSD for about a week and been trying to find a setup for entering into the strong , at least for the short term. Zooming out the price action chart, I was able to recognize a really well developed chart pattern which is called the . These types of triangle are usually taken as signals and they can form in both and markets.This type of triangle patterns form when market price gets very volatile and later begins to consolidate into a tight range. This consolidation phase gives us (the traders) time to setup our entry when a breakout occurs. In descending triangles the sellers are continuously putting pressure on the buyers, which results in the formation of lower highs and strong .
The first primary target, after getting the breakout to the downside, is equal to the height (x) of the . I have also labelled two additional major target levels, if you are planning to have more than one shorting position for this setup. The first major target level is very close to the 2nd and 17th December lows. The last major target is the bottom of the consolidation zone, which could potentially act as strong . Once the downside breakout has formed, stop loss will be placed above the falling ( connecting the “a”, “c”, and “e” points). A breakout to the upside would invalidate the .
I have also attempted to label the price action within the by using Theory. If there are any mistakes in my wave count, please don’t hesitate to point them out, as I really want to understand this theory the correct way.
Please feel free to AGREE or DISAGREE with this idea by leaving a comment below. Hit that thumbs up button (top left corner of this chart) if you like the idea. Thank you everyone for all the SUPPORT that you have given me so far, I truly appreciate it. Good luck everyone :)
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