News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bullish
Wall Street
Bullish
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • According to John Hopkins University, Coronavirus deaths globally have surpassed 1 million people
  • What is the outlook for financial markets ahead of the first presidential debate and how are Democratic nominee Joe Biden and President Donald Trump doing in the polls? Find out from @ZabelinDimitri here: https://t.co/QQwAZTxZFg https://t.co/7meK4cF0U9
  • ❗Heads up for #Rupee $USDINR traders! The #RBI monetary policy announcement originally set for October 1 is going to be rescheduled at a later date, tbd, Will update once time is known - https://t.co/qVnd9BAnSl
  • European negotiators have indicated for the first time that they are prepared to start writing a joint legal text of a trade agreement with the UK, before fresh talks begin today, according to The Times $GBP
  • Heads Up:🇯🇵 BoJ Summary of Opinions due at 23:50 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-28
  • The recent rebound in US stocks could be a welcoming sign for the road ahead, but could the #DowJones be at risk to a turn lower? The 20-day Simple Moving Average (SMA) may cross under the 50-day SMA, creating a bearish 'Death Cross' Learn more here - https://www.dailyfx.com/education/technical-analysis-tools/moving-average.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/VhlENtJjy2
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here:https://t.co/1oygcFMFNs https://t.co/Wk736Zdvhb
  • #SP500 Surges on Fiscal Stimulus Hopes Ahead of #PresidentialDebate - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2020/09/28/SP-500-Surges-on-Fiscal-Stimulus-Hopes-Ahead-of-Presidential-Debate-.html
  • The US Dollar will be bracing for a cascade of political risks including the first presidential debate, ongoing stimulus talks, the Supreme Court vacancy against the backdrop of key employment data. Get your #currencies update from @ZabelinDimitri here: https://t.co/quU4MmUjxA https://t.co/uoeSZapu8I
  • What is seasonal change in volatility. Are we going through one right now? Find out: https://t.co/G0qfpOmMl2 https://t.co/WfxEHnGobD
Patience Pays When You See This Price Pattern Correction

Patience Pays When You See This Price Pattern Correction

2014-10-14 03:15:00
Tyler Yell, CMT, Currency Strategist
Share:

Talking Points:

-Looking for a Clean Correction or Reversal

-Waiting for the Definitive Move Higher or Lower

-AUDUSD at a Turning Point?

When in doubt, don’t”

-Benjamin Franklin

Traders are quick to try and spot the perfect entry. This is tricky because the perfect entry is found only in hindsight and is often more luck than skill because to identify the perfect entry is to identify how the collective whole of the market will act before they do. Instead of finding the perfect entry, traders can easily do better by finding clean patterns that allow for low-risk higher-reward set-ups and stay away from messy patterns before entering.

If you want to put this article to immediate use, feel free to try this information out on a FREE Forex Demo Account with access to multiple markets.

Looking for a Clean Correction or Reversal

Patience Pays When You See This Price Pattern Correction

Presented by FXCM’s Marketscope Charts

Pre-Trend or Trend Correction patterns are very helpful guideposts for traders to identify an entry. A correction can be identified as any disruption in the trend that is not a reversal. If an uptrend does not reverse and become followed by lower highs and lower lows, we’re looking at a correction and not a reversal. Often the first break of a prior extreme or fractal can show you the water is at least no longer safe as a trader and it’s best to let someone else test the waters before you jump in a trade.

Recommended Reading: Follow the Fractal Tool Toward Better Breakout Entries

Learn Forex: Know When the Water is Safe to Enter & When It’s Not

Patience Pays When You See This Price Pattern Correction

To carry the analogy further, a correction is clean when it follows any of the common pre-trend or trend correction patterns. A reversal is clean when after a bottom or high is made, a series of higher-highs or lower-lows begin to develop showing that a new force is taking over. A correction is messy and not worth trading when levels break higher and lower and no clear direction is taking shape. This can be a sign for traders with a limited sense of capital to stay away from the trade.

Learn Forex: AUDUSD had multiple rough water bottoms before a decisive breakout

Patience Pays When You See This Price Pattern Correction

Presented by FXCM’s Marketscope Charts

Waiting for the Definitive Move Higher or Lower

From an emotional standpoint, it’s exciting to think about finding and catching the one big turn in a currency pair. Of course, emotions and money rarely mix well. Many traders could fare better by focusing on clean set-ups. Clean set-ups mean that you’ll likely miss the first move of the new trend but you’ll know that the balance has shifted and you can at least be early on the new trend and ride it until it reverses.

Recommended Reading: Just One of a Thousand Insignificant, Little Trades

Learn Forex: USDJPY Has Shown Clean Reversals After Strong Moves

Patience Pays When You See This Price Pattern Correction

Presented by FXCM’s Marketscope Charts

Lean how to manage your trade so the trade doesn’t manage you. You can register for our FREE online course here.

Could AUDUSD be near a Turning Point?

Patience Pays When You See This Price Pattern Correction

Presented by FXCM’s Marketscope Charts

2H 2014 has told us a few things about the FX market and one is that volatility is back. As volatility has returned, some currency pairs have fallen from grace such as the AUDUSD, which dropped from 0.9500 in July to 2014 lows this month sub-0.8650. What’s important to know is that we don’t know what AUDUSD will do tomorrow or next week but we can form likely thoughts and have trades ready depending on how it turns out.

We can see from prior pivots that AUDUSD tends to chop as it tries to form a bottom. A choppy market means that bulls and bears can both get hurt because near-term prior highs and lows are taken out without a clear direction forming. As a trader whose capital is at risk, when I recognize this type of pattern near key support, I’ll stay away until a reversal develops or support definitively breaks in such a way that we could find ourselves in a new multi-year trend.

Recommended Reading: AUD/USD Breaks to a New 2014 Low

Happy Trading!

---Written by Tyler Yell, Trading Instructor

To contact Tyler, email tyell@dailyfx.com

To be added to Tyler's e-mail distribution list, please click here

Tyler is available on Twitter @ForexYell

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES