First I want to give a few recommendations:
1. Trade ONLY what you see in the charts.
2. Do not make forecasts or predictions because you will make mistakes based on this predictions.
3. Don't employ a wishfull thinking in trading because you will make mistakes and lose money.
Ok, now, if you take a good look at your charts you will see that the price is doing only two things:
1. TRENDING and 2. CONSOLIDATING.
The price is trending (moving) from an important level to another important level. This important levels are levels of support and resistance. This important levels can be demand and supply levels. We can spot this levels in intraday charts (5-15-30 minutes and 1 hr) or in the daily charts (4-5-8-12 hrs and daily) and weekly and monthly charts.
The price does not trend in a straight line. After trending, the price will certainly consolidate.
After trending, moving between two important technical levels, the price will start to consolidate. After the consolidation the price cand do two things, to resume the move in the original direction or to revers.
If the price will resume the original move, the consolidation area will become a CONTINUATION PATTERN, which can be a flag (bullish/bearish) or a triangle (wedge).
If the price will reverse, the consolidation will become/creat a reversal pattern (double/triple tops/bottoms, head and shoulder, the 123 pattern).
Weh the price escape from the consolidation area it means the price is BREAKING OUT of that area.
So, ALL CONTINUATIONS of movements AND ALL REVERSAL of movements START WITH A BREAKOUT from that area!!!
I always say trading is simple but not easy.
Now, in the pictures below, I will show you with charts what I have told you above.
EURUSD-intraday-trading and consolidating and BREAKOUT FROM CONSOLIDATING AREA:
1. FIRST WE IDENTIFIE THE CONSOLIDATION AREA. For this we use the line charts
Because the price, before entering into the descending triangle consolidation area, have come from "above", from a higher level (1.389-1.38) we can call this descending triangle a CONTINUATION PATTERN.
We enter into the breakout when the coresponding candlestick closes below our support line.
Now, the breakouts are very important. We can trade the breakouts not only from the consolidation areas but also breakouts from trend lines.
Please read my blog about breakouts: http://www.forexstreet.net/profiles/blogs/holly-grail-of-forex-holl...