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Three Chart Patterns for the Year’s End

December 25, 2016 (Last updated on March 8, 2017) by Andriy Moraru

Christmas and New Year holidays should be a quiet time in the Forex market, but these three chart patterns below will help you keep yourself busy during the period and at the start of 2017.

All patterns are drawn using the same principles: the borders are shown with the yellow lines. The cyan lines serve as the entry points (they are detached from the borders using a 10% buffer). The green lines are take-profit targets. In all three cases, stop-loss is to be set to the opposite end of the breakout candlestick.

The bullish pennant on the daily chart of USD/JPY tells a tale of a short-term consolidation following a strong upswing in the rate. A bullish breakout is a valid signal for buying. A bearish breakout or sideways trading will invalidate the formation:

USD/JPY - Bullish Pennant Pattern on Daily Chart as of 2016-12-25

Update 2016-12-28 7:02 GMT: Entry triggered at 117.710 about 5 hours ago. Stop-loss is set to 117.178 with take-profit 121.370:

USD/JPY - Bullish Pennant Pattern on Daily Chart as of 2016-12-28 - Post-Entry Screenshot

Update 2016-12-28 20:07 GMT: The trade hit stop-loss an hour ago as the price retraced from its breakout level:

USD/JPY - Bullish Pennant Pattern on Daily Chart as of 2016-12-28 - Post-Exit Screenshot

This long-term ascending channel is a correction wave inside the long-term downtrend that had started in January 2016. Downside breakouts from ascending channels signal bearish trend continuation:

USD/CAD - Ascending Channel Pattern on Weekly Chart as of 2016-12-25

Update 2017-01-12 12:02 GMT: The sell order triggered some 4 hours ago. The open price is 1.30927 with stop-loss at 1.34604 and take-profit at 1.25496. The breakout looks strong enough and the risk-to-reward ratio is fine here:

USD/CAD - Ascending Channel Pattern on Weekly Chart as of 2017-01-12 - Post-Entry Screenshot

Update 2017-03-08 20:15 GMT: The trade has hit its stop-loss at 13:15 GMT today. It is a classic example of a failed breakout:

USD/CAD - Ascending Channel Pattern on Weekly Chart as of 2017-03-08 - Post-Exit Screenshot

The British pound is consolidating against the Aussie in a sort of an ascending triangle since the end of November. Despite its major fundamental weakness, the pound will demonstrate a notable upswing should the rate breakout through the triangle’s upper border:

GBP/AUD - Ascending Triangle Pattern on Four-Hour Chart as of 2016-12-25

Update 2016-12-29: I am cancelling the trade setup as the triangle has been broken at its lower border:

GBP/AUD - Ascending Triangle Pattern on 4-Hour Chart as of 2016-12-29 - Post-Cancellation Screenshot

I detected the ascending channel using the Channel Pattern Detector indicator.

I have built all these charts with the help of the ChannelPattern script.

You can download the chart templates for MetaTrader 4 platform: USD/JPY, USD/CAD, GBP/AUD.

You can trade these setups using my free Chart Pattern Helper EA.

If you have any questions or comments regarding the three patterns analyzed in this post, please feel free to reply using the commentary form below.

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