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Thomson Reuters - Eikon
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Identify Chart Patterns

This chart shows two of the most common patterns used for technical analysis that provides a probable signal as to where the next price action would take its course.

a. A rising rectangular channel coming from the high was created within a “Butterfly” Gartley bearish formation on this weekly candlestick bar formation.

b. The signals provided by these two patterns are bearish and well within the confinement of its channel pattern.

c. The previous closing or last candle bar showed a stronger pullback at the closing of the US session dated the 31th of July 2015. Likewise; a typical market reaction on short covering rally from a daily decline at the closing of the month. This pullback shows the long tail / wick / shadow of the price while extending price action to continue towards the higher band of its channel.

d. Watch for the third chart pattern being created moving forward at the opening of the new month.

 In the making: Symmetrical Triangle

The monthly chart configuration shows the third probable technical pattern when line extensions are carefully drawn in projecting a continuing probable price action for the US Dollar; measured by the DXY Index.

Although, the Apex of the Symmetrical triangle would not be completely filled-in; the price pull back on the last trading day ending 7/31/2015 was a short-lived reaction from the negative report and changed sentiments that provided short-sellers to cover positions on the closing day is the evidence of such market behavior.

Once the pattern of a bearish signal was seen, waiting for prices to react to it within a reasonable period of time would take place. For as long as prices movement are confined within the triangle “Apex” and makes a breakout in either direction a follow-through would e expected. In the event such follow-through fails the primary trend would overshadow the signal had previously provided and can be termed to be a false reaction.