The Ellipse

Last week's GBPUSD spike downward provided the 3rd point of contact on a 1 hour chart for the construction of an ellipse. I had started the ellipse based on a 2 points of contact, but was off in enough ways to not trade it.

One of the key elements is the angle of the major axis. More often than not, it will be 60° in difference from its mated axis of its mated ellipse. The current angle is 63° to the chart, but just over 60° from it's mate.

The minor axis usually defines the beginning or end of the famous 50% consolidation area. In the chart below, the minor axis acted as a minor support level to be broken while the major axis provided the "path".

Another other key element is the inner circle. The inner circle usually defines the consolidation area by either containing price along the perimeter or the perimeter acting as some sort of support/resistance.

Price is in a triangle right now, but the apex is also a minor degree in time from the start of the Gann Grid. Based on my analysis from other charts, I'm expecting price to go down. However, I wouldn't be surprised to see a Ross Hook aka false breakout heading North before jetting South. So I wait for a signal to short.

I'm also including a 4 hour chart of the USDX or DXY(Dollar Index) and an ellipse I've been watching there.