EUR/USD Completing Head And Shoulder Pattern
Today in DecaPip Daily I would like to have a close look at the EUR/USD as we approach some really interesting levels in the foreign exchange markets most liquid currency pair.
We can see from a trading perspective the EUR/USD is making lower lows and lower highs, which means for now we should go with the prevailing medium term trend being played and look for great swing sell areas to enter the market.
A point of caution here for traders also as we approach the bottom of the recent 1.08-1.11 range we should be aware of any large buy orders below the 1.0800 level and there are bargain hunters who want a cheaper EUR/USD rate and may well step in with heavy bid orders.
Below is my favorite EUR/USD chart at the moment.
EUR/USD 8-Hour Chart
We can see a declining wedge pattern may be forming and as such if price holds the line of support it could in theory reverse sharply from the lower blue line and could form a bottom. Alternatively, we could see a test of the middle or upper resistance lines clearly marked if a bottom was formed in yesterday’s trading.
Moving to an intraday basis we can see the EUR/USD is in the process of completing a head and shoulder pattern. Currently on many time frames these patterns are emerging and some more reliable than others.
EUR/USD 2-Hour Chart
The 1.0935 to 1.0958 levels seems a good spot to try sell orders if price action is weak and also so does the upper line located at 1.1050.
If we can break below this recent pattern and get some follow through it will be particularly interesting to see how much momentum we get as the head and shoulder’s measured target is some 200 pips below the bottom blue line.