On Thursday I shorted the Euro based on a 4h triangle forming. Normally, I don't like trading inside of consolidation, but on the 4h there is usually sufficient range for swing trading. Especially the past few weeks where the daily ranges on the Euro are over 200 pips. Initial entry was based on the trendline as well as confluence from price-time squaring analysis.Through the Euro session into Friday, price fell into a channel on down to the 50% area and bottomed on one of my time points. A very profitable start and a good place to exit. However, the plan was to swing trade the larger pattern. I figured price would meander on back to the 23.6 or 11.4 for a setup to add on to the short. Again, being a swing trade, I wasn't too concerned about the retrace eating up the profit of the 1st position because the 4h pattern is strong.
Price congested at the 50% mark after time and there were no signals when price reached the minor time lines. Price finally busted on through the 23.6 with gusto and that made the next time marker the key time marker. I used a trend line cross on the 15 min. as a time mark which also coincided with a 13 bar count from the recent low on the 30 min. Remember, time lines are most important when price is falling or rising into them for 5-8 bars or more.
When price breaks through a key resistence/support area with gusto against the larger pattern or trend, it is many times a false breakout or pattern failure. I was not shaken out because there was still one more key Fibonacci level of resistence. Also, price had gone parabolic. I didn't draw it on the screenshots, but it's plain as day. See if you can see the parabola. Parabolas are nice setups because what goes straight up must come down in time related to the angle of ascent.
When price reached the price level right at time I didn't even wait for a closed candle. This setup is like getting AK and then flopping a full house. 11.4 and it's 88.6 opposite are relatively unknown fib ratios but they're so powerful when they hit. Combined with the 13 bar count, there is no choice but to short. Based on time, I'll be holding on for possibly 3 full trading days and watching for more price-time squaring or key levels of support to fall to add on . A pretty good ending at the end of trading Friday.
