FibMaster
04-21-2009, 11:23 AM
There is a contest under way. A collision between two classic chart patterns. Over time we will know which one wins out, and how to profit from the Yen chart as it unfolds.
The 4-hour chart shows a declining channel, with the Yen rallying up towards an attractive selling zone. Traders will want to short near the top of that channel, and have a stop-loss above the channel in case the rally is too strong. The profit exit to cover shorts would be near the base of the channel in the future.
The daily chart shows a bullish trend-line! Traders will want to buy that chart, taking long positions near the rising trend-line, with a stop-loss below that trend-line.
Those two patterns are in conflict, one is a shorting pattern, the other is a long trade setup.
Which one will win?
The 4-hour chart shows a declining channel, with the Yen rallying up towards an attractive selling zone. Traders will want to short near the top of that channel, and have a stop-loss above the channel in case the rally is too strong. The profit exit to cover shorts would be near the base of the channel in the future.
The daily chart shows a bullish trend-line! Traders will want to buy that chart, taking long positions near the rising trend-line, with a stop-loss below that trend-line.
Those two patterns are in conflict, one is a shorting pattern, the other is a long trade setup.
Which one will win?