The uptrend on the four hour AUD/USD has continued to climb higher and is trading with the Rising Wedge as the market cycles remains in a mark up cycle.

The mark up cycle is the key to playing trending patterns such as a Wedge. The trend is confirmed by the 12 to 2 o’clock angle of the 34EMA Wave. The plug in for my GRaB 2.0 plug in for MT4 is available at my blog, RagheeHorner.com -  but please only download it if you are already familiar with how to install plug ins on the MT4 platform.

The support of the 34 period EMA high currently at 0.9124 as well as the bottom line (support) of the pattern at offer an excellent area to enter a swing buy on a correction.

The 0.9100 major psychological level is also another level to watch for continuation as this level of support will be a key levels that bulls will have to support if the trend is to continue higher.

I have been playing shorts off my 34EMA Wave as the daily downtrend bounces but with the bounces not following through lower as they once were, my attention has shifted to intraday charts, many of which are in uptrends.

The Channel Up pattern has pulled back to support along the bottom line of the pattern.  The 34 period EMA high is at 1.3629 which would be an alternate swing entry buy. There will be support between the bottom line of the pattern and the 34 period EMA high. This will be a swing buy “zone”.

The swing buys will be valid as long as the market cycle is in an uptrend confirmed by a twelve to two o’clock angle Wave.

The GBP/USD broke lower after prices traded below the support of the rising wedge on the 240 minute chart at 1.5054. The 240 minute set up I was looking at was for a buy entry but since prices broke lower, as I had mentioned in yesterday’s update, the focus had to shift to the 15 and 30 minute charts because those time frames were in mark down.

Remember trading isn’t just managing about the pair but the time frame as well.

The move lower on the 30 minute GBP/USD did offer swing short opportunity when prices bounced to the 34 period EMA low. Currently prices are at the 34 period EMA low again offering another trigger for a short with the intraday downtrend.

The set up here hinges on whether the uptrend line support of the wedge will hold prices from breaking 1.5000.  On a 240 minute chart the 29 pips to the “00″ doesn’t seem worth the risk of a short entry on the trendline break. The continuation entry would be better suited.

If a short trade is the desired entry, there are better and lower risk opportunities on the 15 and 30 minute charts because the market cycle is a downtrend on both those time frames. Look for bounces on the short term intraday charts to take entries to the downside.

The market cycle on the both the 15 and 30 minute time frames are up which means we’re in swing mode and should be keeping an eye open for pullbacks to the 34ema high.

The 15 minute chart is sitting at this levels right now, but I would actually prefer to wait for the 30 minute pullback.  Here’s my thinking:  We’re fresh off teh rejection from the ceiling and I would like more room t run if we are to see another push higher and that means waiting for a pullback lower.

MT4 chart with Autochartist plug-in

Prices are closing in on a corrective entry short which simply means I’m shorting a bounce…

The daily EUR/USD has a downtrend that has bounced outside the intraday range and is triggering a swing short at the 34 period EMA low waiting at 1.3744.  The Fibonacci Extension level at 88.6% is another level to watch as will the 1.3750 major psychological level.

The move higher towards the swing short is coming on the heels of the London close whch normally I would not like for a momentum trade however for an exhaustion set up which is what a swing is, the timing is actually more well-suited to setting up the reversal at the levels I am watching.

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My preference for short term intraday charts for about three-four months now comes from the lack of follow-through I’m seeing on longer term charts, not to mention the higher risk/reward ratio that I’m not willing to take on in this uncertain environment.

Both charts are using MT4 with the Autochartist chart pattern plug-in

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MT4 chart with Autochartist plug-in

Prices broke the support of the rising wedge pattern as the 1.3612 level was pierced.  The momentum that’s pushing lower has established a downtrending cycle as the trend has shifted sharply lower.  Waiting for a correction going into the Asian session would be the best scenario.  The short trigger is currently at 1.3543 at the 34ema low.  Keep in mind that this trade is only valid as long as the trend is down.  An alternative time frame to this 15 minute set up could be the 1.3550 level on the 30 minute chart.

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MT4 chart with Autochartist plug-in

While the short term 15 minute chart moves slowly lower, the range has been set between 91.13 and 91.36.  If prices continue to bounce within this range, look for a transition on the 15 minute chart to a sideways market.  This stall is what’s needed to establish support and perhaps even rally the 240 minute swing correction buy as price have reached not only the top line of my Wave (34ema high) but also the 61.8% Fibonacci Retracement.

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