Apply Point and Figure Charts for Forex Day Trading

On hourly point and figure charts, yen made a double top pattern at 98.50, which is at the same level of the triple top before last week's slide. Then the double top breakout met the same resistance from 99. It would be interesting to watch whether this up thrust will challenge the key 100 level.

Euro met a double top resistance at 3633 in early US session. The slide ended with a higher low, which indicates buying interest.


On pound's candlestick chart, it's clear the lower highers indicate selling pressure.

On hourly point and figure chart, pound formed a downward channel. After met the overhead resistance from the top of channel, pound broke down from the pivot point (4598). The slide stopped right at the bottom of channel, which is also the 38.2% fib retracement level. The key support level 4392 is still intact.

After five days of top building, euro's daily range contract and today is a NR7/ID, we might have a trending day by the last trading day in March. Yen formed a NR7.

Day Trading Rules - Patience is a Virtue

The top building phase for euro is very tricky. The lower boundary was attacked three times and made a series of lower lows. Finally, the support was found at 3415 - the low of 3/19. Each breakdown, each lower lower, made it look so like a trend reversal. It's definitely not a time to take the break signal during the phase of range building. Most likely it is a trap. Since the boundary was built, we can shift our attention to the upside breakout. If euro want to stay longer inside of this range, that's fine; if euro take a breakdown, we will respect that. We don't predict how long euro will stay inside of this range, nor which direction it will break, but we do know if ever euro breakout from this range, we would like to follow it.


Pound found its top at 4776, the morning up thrust made a lower high. Key support level is 4392.


Yens retracement was less than 38.2%. So the up trend on hourly chart is still intact. It would be interesting to watch how yen gonna deal with the overhead resistance.

Day Trading Rules - No Setup No Trade

As mentioned in yesterday's post Inside Day for Three Major Currency Pairs, euro is in a top building phase. It's a very tough switch from a trend mode to a swing mode. There were three false breakdowns from the top range. At the beginning of US session, euro formed three pin bars which indicated indecision. At 1:00pm, euro closed under the lower bound of the top range. Although we were anticipating a top breakout for trend following, we need to respect what the market is telling us now. There is no long signal yet. Patience is a virtue here. 3415 gonna be a key support level.


Pound did breakout and formed a higher top range. That's the kind of price action we would like to see in an uptrend. Pound made a 2nd new high of 20 trading days (H20).


Yen kept moving up and almost retraced last week's slide. Whether this up thrust will challenge the key 100 level, only the market can tell us.

Inside Day for Three Major Currency Pairs

Friday was inside day (ID) for three major currency pairs. Since there was no reduced volatility, we should be on alert about false breakout.

At the beginning of London session, euro made a triple top on candlestick chart, just 2pips shy of Friday's swing high. Noticed the divergence given by the MACD, even if euro did breakout, we wouldn't take a long position. There was a strong support zone just above 1.3500 (swing high 3533, Friday's low 3516, and 23.6fib 3524.) 3500 is today's downward average daily range. Since the uptrend was already established, the probability for euro to reverse is slim. The downward movement took Friday's low by 32pips, then crawled back. That's a classical stop hunt. Now euro formed a perfect top range from 3736 to 3516.


Unlike euro, pound did breakout, but all three attempts failed, and formed a triple top.



Yen was staying in an upward channel, made a series of higher highs and higher lows. It retraced more than 61.8% of last week's slide. On hourly point and figure chart, yen made a double top breakout. Yen reached its upward average daily range 97.30.