Potential Head and Shoulder Pattern EUR/USD 1 Day Chart

[Craig]

Hi All,

I was just doing some chart pattern searches and have found a potential Head and Shoulder pattern on the EUR/USD 1 Day chart. I have attached the chart for you to check out.

Take care,

Craig

[Craig]

Hi All,

Although we have seen some bullish movement in the pair, the pattern still has not been invalidated. Here is an updated chart. As long as the 2nd shoulder does not exceed the height of the head the pattern remains valid. The neckline slopping upward as opposed to downward is a little less reliable; however, I believe it is worth keeping an eye on.

Happy Pip Hunting all,

Craig

[Craig]

Hi Everyone,

Well, the pattern has still not been invalidated. As you can see from the attached chart, the right shoulder is still lower than the head. It is also below the 200sma. This indicates to me that we are still in a downtrend (bearish) on the daily time frame. It will be interesting to see what happens when price gets closer to the 200sma! What happens could determine the direction of the pair for several months, if not the rest of the year.

Take care,

Craig

[Craig]

Hi PipHutters,

As you can see the Head and Shoulders pattern is still valid. I went short (as you can see on the chart) a while ago due to the large reward vs risk potential. I will not add to this position until the neckline is broken. Of course, the Fed decision on QE3 did help support the pattern!

Take care,

Craig

[Craig]

Hey Everyone,

As you can see the Head and Shoulder pattern in near the neckline. This will be the crucial point to verify the pattern. If the neckline is broken, and closes below on the daily chart, look for price action to eventually move to the target (check out the Elliot Wave Analysis threat to see how I believe price will move to the target). I have been short since the top of the right shoulder and have been following price and moving my stop loss to swing highs on the one hour chart. I will add to my current position when price closes below the neckline on the daily chart.

Take care,

Craig

[Craig]

Hey Everyone,

This pattern is still in play. We are currently in consolidation as Mark has noted in his analysis. I did close out most of my short position on the second touch of the neckline. I will leave that position open and will not add to it until we have a daily close below the neckline shown on the chart below.

Take care,

Craig