Happy Monday, Punters!
Skimming through some charts first thing this morning, the EURUSD weekly jumped out with a couple of potential setups occurring.
Consider the chart below:
What we’re seeing here is a clear level of demand (blue) and a tested level of supply (pink), which have both been tested a few times over the past couple of years. Interestingly, we’re also seeing the potential formation of a Head & Shoulders pattern. Whilst it’s early days for our H&S, the completion of such a pattern would add significant probability to the downside.
It’s also worth noting that failed H&S patterns can be just as strong at indicating a reversal setup.
Traders could play this a few ways… we could potentially see price bounce strongly off our demand zone, in which case a solid bounce should occur; or, we could see a failure of our demand zone, resulting in a further significant decline; or, we can await to see if our H&S pattern plays out.
Either way, confirmation is needed before actioning any of the above setup ideas.
As always, trade safe folks.
Source: Vantage FX Blog