It is always recommended that before you enter any trade, you should pan through varying chart tenors to see if your entry is supported on multiple time frames. Even when you have no pending entry sometimes you will come across chart patterns or key Support and Resistance levels that may not be as apparent on the time frame you normally trade.
GBPUSD:
In the chart below we use a two hour time frame. As we know, the GBP has been trending nicely against the Greenback. You can observe this price behavior with the black sloped trend lines. However, price begins to trade horizontally when it falls through trend line support at the red vertical line. At this point we shift from trend line Support and Resistance to range bound or horizontal Support and Resistance (Green lines). Price broke below trend line Support and then broke through range bound Support suggesting that the move lower would be supported. Consequently price did drop and retested the entry level (blue arrow) but price subsequently fell again as that there is more GBP weakness ahead. By analyzing a faster time frame we were able to isolate a point where momentum faded which afforded us the opportunity to play a breakout against the trend.
USDJPY:
This pair is setting up nicely for a Head and Shoulders pattern. Again, we utilize a two hour time frame in order to analyze price action. We are able to isolate several potential Shoulders on left side and future price action will determine which one we use to generate the potential entry point. This pattern has the best results when it is set up by a strong move higher as shown by the blue arrow below. If the pattern completes itself price will usually retrace in the manner in which it rose. A Head is also clearly visible (see chart) and we can approximate the neckline which will be the point of entry. An entry can occur if the right Shoulder forms and price subsequently closes below the neckline. A stop loss should be placed on a close above the top of the formed right Shoulder.
USDCAD:
This pattern more closely resembles the GBP chart above with one big exception, there is no clear trend setting up the move. What we do have though is a classic retrace on this two hour tenor. There are proprietary trading shops that use a Bell Curve pattern to identify and profit from retraces. Look how points A & B mirror each other. We also see a clearly defined Top formed near 1.0660. However, we get a true confirmation of the pattern when we smooth out price action with a 30 day moving average. Notice how point B does not break the curve of the 30 SMA. Once price breaks below point the defined Head of the Curve an entry can be assumed with Stops and take profits just outside of the 30 SMA.
Written by bforex.com
