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Today we’re going to look at a currency pair in a different light. As you may know, I’m a huge fan of trading on the 4 hour and daily time frames. In fact 99% of the trades I take are on these two time frames.
That said, there are times when the 1 hour chart can be useful. But it’s important to understand that the usefulness of a time frame is dependent on the market’s perception of a given area in the market. In other words you want to focus your attention on the time frame that gives credence to a particular price action level or pattern.
EURNZD is a great example where the 1 hour chart can be of use. I watched the pair climb back above channel support (chart below) just minutes before the 1 hour period closed. This gives me reason to believe that the market is respecting the pattern on the 1 hour time frame, which could help us refine a possible entry.
EURNZD 1 hour chart
Given that this ascending channel is a byproduct of the decline from November 25th, a break of channel support is preferred.
A look at the 4 hour chart gives us two potential profit targets – the horizontal level at 1.5655 and channel support around 1.5550.
Summary: Wait for a close below support on a 1 hour basis. Those looking for a more conservative entry can use the 4 hour chart. Key support comes in at 1.5655 and channel support around 1.5550.
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