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 Post subject: Please explain this price formation
PostPosted: Wed Apr 28, 2010 3:06 pm 
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Joined: Wed Mar 31, 2010 2:58 pm
Posts: 17
Location: Greece
Hi, I would like to ask if anyone can tell me if this is an ascending triangle.Thanks.

Kind regards,
Ioannis


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 Post subject: Re: Please explain this price formation
PostPosted: Wed Apr 28, 2010 4:02 pm 
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Joined: Tue Jul 14, 2009 2:54 pm
Posts: 242
Location: Glasgow, Scotland
Before deciding if it is a triangle you need to be clear about where you are drawing your lines. As recommended here I switch to line view to draw support and resistances. This uses the close value of each candle. That gives the following.
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The reason that this is important is that the closer to the apex of a triangle the breakout occurs the less reliable it will be.

Triangles can be quite subjective to define so this is my opinion only. I don't think I would trust this as a triangle for a couple of reasons.
Firstly, I'd expect the 23rd April 08:00 candle to be part of the shape. Typically a triangle at the end of a trend would start at a peak/trough.
Secondly, I think that there are too few candles between peaks and troughs.

That said the support and resistance are reasonable, though another test would be better so watching for a break of either may be worthwhile. The daily candle looks like it may close as a bullish engulfing but there have been several of these recently which didn't follow through.

All in all, I wouldn't be watching this actively for a trade based on a triangle shape. I think the one to watch for is a downtrend continuation break of the support followed by a break of the recent lows at about 0.8612. An RSI breakout could precede this.
Looking at the weekly it is clear that the current area has acted as support and resistance several times before. (Always look at the longer timeframes to put your analysis in context)

All the best

Michael

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 Post subject: Re: Please explain this price formation
PostPosted: Wed Apr 28, 2010 4:21 pm 
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Joined: Wed Mar 31, 2010 2:58 pm
Posts: 17
Location: Greece
Thanks a lot Michael.

Kind regards,
Ioannis


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