Head and Shoulders Forming on EURUSD

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We visit the EURUSD daily chart and noticed a head and shoulders pattern in the making.

A head and shoulders pattern looks like a human head with 2 shoulders on either side. The shoulders are lower than the head and are often of equal height to each other. The blue line extending horizontally across is the neckline, which connects the 2 low points.

EUR USD head and shoulders march 2012

EUR USD head and shoulders – click image to enlarge

This is a top reversal pattern, or a bearish signal. Of course, this trade setup is still in the making and is only confirmed if prices follow the direction of the red arrow, breaking below the neckline. The pattern is however void once prices break the high of 1.3484.

You can expect many traders to go short if prices break below the neckline level of around 1.3017.

Written By: AsiaPacFinance.com

AsiaPacFinance.com’s goal is to be the primary independent source of reliable and actionable trading ideas. We provide online trading courses and trading tools for a growing audience of self-directed traders.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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