August 7th 2011: Megaphone Chart Pattern at USDCAD

An interesting Megaphone (or Broadening Triangle) chart pattern appeared at the USD\CAD 30-min chart. This is generally a reversal pattern which suggests that a bearish trend is about to begin. It may also turn out to be a Diamond chart pattern which is one of the strongest reversal chart patterns ever. If this is the case we will enter a short trade on the upper trend line of the diamond, and will enter a short trade in a breakout of the pattern.

Very interesting chart pattern can be seen at the USD\CHF chart. First we can see that price has touched a very main trend line and has touched it, starting a big downtrend last week. After a short-term asymmetric megaphone pattern price broke downwards.

Now we can see that price is in another megaphone pattern which can be a long signal (but due to strong downtrend and bearish momentum it is more likely to go down). Therefore we will enter a short trade if price hits the upper trend line and creates a bearish candlestick pattern.