Some background on my analysis: Each morning starts -- in fact all analysis starts -- with a look at the U.S. Dollar Index Cash chart. I watch five timeframes and from these five I will determine which has the best set up. This also means I do not use multiple timeframe confirmation. Which is widely known as looking at set ups with a top down approach using a longer timeframe chart to confirm a shorter timeframe -- again I don't do this.

If anything I consider the bottom up approach for appropriate as a stall, reversal, congestions, consolidation, etc. will first be apparent on a short term chart. For me the 30 minute chart is the most effective shortest term chart so I do not go any shorter term than a 30 minute chart. The other four timeframes I use are the 60 minute, 180 minute, 240 minute, and daily chart. Each will be scanned individually for set ups.

(Let me also add that the "Three Classic Tools to a Three Step Set Up will work on any timeframe, I just have found shorter timeframes not as well-suited to maximize profits.)

Let's start with a look at the Dollar, this one is of the daily chart which I feel shows the overall congestion that the Dollar continues to trade within.

Now if I were to compare this to this morning's thirty minute chart, it would appear that the U.S. Dollar is in an uptrend -- which it is short term -- and this opinion would be relevant to the shorter timeframe set ups.

Here's an easy way to determine a trending versus non-trending markets, and I'll be using this type of measurement daily in my analysis. Look at the three magenta lines on my chart. These lines are the 34 EMA (exponential moving average) on the high, low, and close; together they make up the "Wave". These three EMAs travel across the chart in what I call "clock angles" so at any time you can look at the lines and determine if they are going sideways (3 o'clock), uptrending (12 to 2 o'clock), downtrending (4 to 6 o'clock).

Here's an example of a three o'clock Wave with a triangle pattern (consolidation pattern) that is a confirmed breakdown this morning.

There's been a lot of top picking in this EUR/JPY but prices either consolidate and then breakdown from consolidation or breakdown below uptrend support, there's no reason to be short on this timeframe. The 148.00 psychological level should now act as near-term resistance and it was also where this breakdown was triggered. Keep an eye on two near term support levels at .67 and .56. You can get more information about the Wave and how I trade patterns at www.raghee.com.