So, what is the reason for entering on the 1 hour chart and why is it important? There are a few things. When price is approaching the 21 EMA and setting up for a trend continuation trade (TC) on the 4 hour chart you should be thinking in terms of "I'm expecting price to move with the current Market Rhythm because...". Because what? Because price is in the vicinity of the 21 EMA on the 4 hour chart. Because price is at a support or resistance level (this is why trendlines and price channels are important) or a slower moving average. Because there is a news event coming out that could continue the current trend. Because the Hi / Lo range of the 4 hour candle that gave a TC MACD pattern may be too large and the risk : reward ratio is 'out of bounds'. The 1 hour chart can help narrow that 4 hour candle range. The following EURUSD 4 hour chart is from the Friday close on 9/12/2008. The numbered vertical lines are where the price initially back to the 21 and the N represents a candle during a US economic news release.

The 4 hour EURUSD chart from 9/12/2008:

The Average Directional Movement Index (ADX) was developed by J. Welles Wilder to gauge the strength of the current trend. The ADX (blue line) is an oscillator that ranges between 0 and 100. Readings below 20 indicate a weak trend and above 40 depict strength in the current trend. Two other components of the ADX are the Positive Driectional Indicator (+DM, green line) that measures the force up in price driection and Negative Directional Indicator (-DM, red line) which measures the force down in price action. For our purposes with looking for and early entry on the 1 hour charts, our main concern is the crossing (up or down) of the +DM and the -DM.

The following 1 hour chart of the EURUSD from 5/26/2008 through 6/4/2008 (These dates were not specifically chosen for any reason. I had to find a 'clean area' on my charts without any 'stuff' drawn on them. Clean, unlike my bedroom.) shows the ADX plotted with the defualt 14 setting. The vertical lines mark where the +DM crossed above/below the -DM or vice versa, they crossed each other either way. There are 24 crosses. All but four of the crosses, marked with the red lines, confirmed the direction of the cross with proceeding price action on the close of the price bar. Meaning that if you went long or short just based on the cross of the +DM/-DM, you would have had 20 winning trades and 4 losing trades. Here, a winning trade is when the next candle's high was higher than the previous high by x number of pips when the +DM crossed above the -DM or the next candle's low was lower than the previous low by x number of pips when the -DM crossed above the +DM.

That long spike down on June 3 was a news event. ALWAYS BE AWARE OF THE NEWS. Markets can range before news events as shown here by the flattening of the MACD, ADX, and the channeling price action as compared to the previous trend.

Vertical line 1 on the 4 hour chart is from 7/31/2008 at 04:00. Vertical line 1 on the 1 hour chart is from the 04:00 candle. Remember, the 04:00 candle on the 4 hour chart represents the time from 04:00 to 08:00.

The overall rhythm of the 4hr chart is starting to get going but the longer term moving averages are still in the picture. Price is trending down but from what we know about the Market Rhythm Strategy things could still look better. In any case we have a TC back to the 21 on the 4hr. We are looking to go short because that is what the price and moving averages are telling us to do. The next candle is a 'fat' doji which tells us that the market is undecided right now but we also know that there is a news event coming up. What was said before...ALWAYS BE AWARE OF THE NEWS. The aqua line on the 1hr chart shows the candle where the news was released. The dark blue line indicates where the -DM crossed above the +DM along with price support, aqua line, being broken as well. This signal occured at the same time the MACD bar on the 4hr chart turned red, which might be looked at as a TC also but the 1hr price action would have made the stop loss more manageable. Entering on the close of this 1hr candle at 1.5589 to the low at the right of the chart would have produced about 70 pips. Again, you don't know when things will turn around so bank 'em when you can.

Vertical line 2 on the 4 hour chart is from 8/4/2008 at 00:00. Vertical line 2 on the 1 hour chart is from the 00:00 candle.

The 4 hour rhythm here is about the same as the previous example. There were two news announcements here. One during the aqua vertical line and then during the during the second 1 hour candle after that. After the market digests the news, the downtrend continues. Note that the 4hr chart price action was hanging around the 21 for a few bars before returning to the downside. The spike up on the news might have been a losing trade if you got in during one of the two down candles. Back on the 1hr, after the news washout was over, the -DM crosses above the +DM at the dark blue vertical line giving a good entry. Again, it's important to let the news play out before entering.

Vertical line 3 on the 4 hour chart is from 8/7/2008 at 08:00. Vertical line 3 on the 1 hour chart is from the 08:00 candle.

The 4 hour rhythm is picking up and the strength of the trend can be seen with the faster moving averages breaking away for the longer term moving averages. Another news annoucement at the aqua line on the 1 hour chart. The 4 hour chart gives a long spike down that would have caused your stop to be about 170 pips if you got in at the close of the bar. The 1 hour chart at the -DM/+DM cross gives an earlier entry with more of a manageable stop loss. Remeber, the 1 hour bar closes some 30 minutes after the news is released. This may or may not be enough time for things to settle down, but the ADX seems to be reliable fo an entry.