Head and Shoulders pattern and Neckline - forex trading signals blog

Head and Shoulders pattern and Neckline ~ forex trading signals blog

Chart Pattern targets

Neckline of the Head and Shoulders 

Euro US Dollar

triggered the Head and Shoulders pattern with the break of the neckline and the Euro moved lower to the Head and Shoulders target, which is marked on the chart with the 100 % Head and Shoulders target. From there, the market retraced back up to the Head and Shoulders neckline and formed a kind of Wedge pattern / Three Drives pattern before the EURUSD reversed and moved down again (right side of the chart).

Overall, the two hammer candle stick pattern (right side of the hourly chart) and the 61.80 % as well as the 100 % Fibonacci extension levels on the 5 min chart helped us in predicting support and resistance zones.

The first hammer candle  occurred at the consolidation price zone of the prior flat "overnight" consolidation pattern of the 21th of October, which acted now as support. The price up moves after the first and the second hammer candlestick created the kind of Wedge/ Three-Drives pattern and market reversed to the downside after the Euro touched the brown neckline of the Head and Shoulders  at around 1.3080.

As often, market penetrated an important Chart level like the neckline and the high of the recent overnight consolidation zone of the 19th of October to clear the stop orders and trigger the limit breakout orders before reversing strongly (False Breakouts - Market Manipulation).

1 hour Head and Shoulders pattern, Fibonacci target

The Wedge / Three-Drives Pattern is better visible on the 5 min chart. Furthermore, we had two Head and Shoulders pattern on the 5 min chart, see the red lines marking the Head and Shoulders pattern. Both patterns worked out relatively well.

The useful Fibonacci extension levels (61.80 and 100 %) are also visible on the 5 min chart below.

5 min Head and Shoulders pattern and Wedge

See also Chart Pattern Manipulation to understand that famous chart patterns are tricky.

The Technical Chart Analysis of the trading days before below

The EURO

found support at the Head and Shoulder price target (100 % fib extension of the Head and Shoulders  height moved to the neckline break), daily S2 and 100 % Fibonacci swing projection. Pivot Points and Fibonacci extension levels only held the market temporarily. The red ellipses underlined the Breakout Timing Strategy (Break of support of the new hourly candle after previous hourly candle closed bearish at the support level).

1 hour Head and Shoulders pattern target

5 min Three Drives pattern

The Developing of the Head and Shoulders pattern

Head and Shoulders neckline and Fibonacci Analysis

on hourly chart but neckline and daily S1 held the market so far. The Euro found resistance at the weekly S2.

In todays session the Euro often found resistance and support at 61.80 % and 100 % Fibonacci extension levels and market often cleared the stops (stop fishing - false breakout) below recent lows (see red arrows on 5 min chart).


The Fibonacci Extension and Retracement levels as well as the Pivot Points revealed important Support and Resistance zones (5 min chart analysis)

1 hour  Head and Shoulders neckline

1 min  Head and Shoulders pattern

5 min Fibonacci levels 

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Neckline of the Head and Shoulders - forex trading signals software downloads

Neckline of the Head and Shoulders ~ forex trading signals software downloads

Hourly Pin Bar

Test of the Neckline

Pin bar as Reversal pattern

The Euro found support at 1.2445 and formed a pin bar on the hourly chart. The bullish pin bar is a reversal pattern and it shows a strong demand at its level of creation. Hence, market was supported at this level and the strong rally back indicated a bullish rejection of the penetrated price level. The pin bar (bullish sign) led to some follow through and the Euro moved up to the 1.2500 zone

However, on the hourly and 5 min chart we see a kind of Head and Shoulders pattern. The brown neckline of the Head and Shoulders and the supporting upward sloping green trend line got broken at 1:15 p.m. GMT (confirmed on the 5 min chart).

1 hour Pin bar

5 min Head and Shoulders neckline test

As often, market retested the recent support which now became resistance (neckline, green line) at 1:35 p.m. (small red circle). However, the neckline/ green trend line held the market, which also coincided with the 5 min 20 SMA and 61.80 % Fibonacci (fib) retracement of the recent swing down.

The Euro initially moved down after the retest but market did a second retest of the brown neckline (green circle) after market got rejected at the 61.80 % fib extension and weekly S1 at 2:15 p.m. (pink circle).

If market strongly bounce back from the 61.80 % fib extension (no initial penetration or consolidation at this level then a temporary rejection of the current trend on this time frame is likely (either a reversal or a larger consolidation).

However, the Euro could not move above the neckline (green circle) and market resumed its downtrend and finally the Euro reached the Head and Shoulders target (100 % fib extension from the largest swing of the Head and Shoulders moved to the breach of the neckline) (blue cirlce).

Head and Shoulders target also coincided with the March 2009 support level and the 100 % Fibonacci  (fib) extension from the recent swing down. The Euro moved up from there but market penetrated this support level with the beginning of the new 4-hour candle at 4 p.m. after the prior hourly and 4-hour candle already touched (respected) the monthly low of March 2009. However, market only temporary breached this level (brown circle) and the Euro found support at the fib confluence level at about 1.2447 and the daily S1.

The Euro hold at the two 100 % fib extension and the 61.80 % fib extension (rejection) and market closed again above/ at the March 2009 support level (rejection). The Euro resumed its uptrend after the formation of two bull flags (first one at the 5 min 20-SMA resistance).

The price zone of the consolidation at 1 a.m. and at 6 a.m. (on the left of the 5 min chart) gave some support/resistance to the market as the Euro reached this price zone again.

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Watch For Double Top Neckline on Usdcad - standard bank forex trading reviews

Watch For Double Top Neckline on Usdcad ~ standard bank forex trading reviews

In the last post on usdcad where I forecast a bearish move. Read the analysis here.   I put a sell order and since I have been raking about 180pips risking just 85pips.

 

I closed about 60% of my trade and will allow the rest to run as i watch price action along the way. I might also add to my position if I see a good bearish continuation wave set up.

 

Presently market is moving well and more bearish move is expected especially if the srong intra day support indicated below is bridged.

 

 

I also spotted a reversal double top formation which if completed could add more reasons to why I chose to sell Usdcad

 

Watch out as price play the game and we follow

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Breakout candle - forex trading signals free download

Breakout candle ~ forex trading signals free download

Trading the Breakout

Unconfirmed Breakout candle

In the Asian Forex trading session

the Euro traded up to 1.2525 but then market started to move down sharply due to the market news about Spanish bond yields (see 5 min chart).

Daily Double Top pattern

5 min Market News Trading

hourly Timing Setup

From the chart technical perspective the Euro formed a bear flag at about 8 a.m. GMT on the 5 min chart before resuming its down trend.

The Euro breached the weekly S1 and the monthly low of March 2009 initially after the 8 a.m. hourly candle closed at this level (red circle) and the new hourly candle started (Breakout Timing for Trading; 9 a.m. market news).

The strong bearish 5 min "news" breakout candle at 9 a.m. triggered the market order stops below the recent lows, particularly the low of the 8th of June at 1.2435 (pink line) and the stops below the March 2009 support level at 1.2456, which held the market this week.

However, the breakout candle at 9 a.m did not get confirmed on the 5 min chart (no close of the succeeding candles below the range of the breakout candle).

 The Euro found support at the daily S2 and the 61.80 % Fibonacci Extension (A-B at C) on the daily chart (stop clearing below the recent lows accomplished- first test).

The 5 min candle at 9:15 a.m.breached the daily S2 but closed above it and also in the range of the prior breakout candle and the Euro started to consolidate around the 1.2435 level (pink line-June 8th).

On the 5 min chart we see that the Euro found resistance at the pink line before breaching it to the upside.

The Euro closed above the daily S1 at 12.15 but found resistance at the weekly S1 so that market fell back into the consolidation around the pink line.

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How Farther Will The Cable Dip - forex trading buddy review

How Farther Will The Cable Dip ~ forex trading buddy review

For more about 3 weeks, I have maintained a strong bearish stand on Gbpusd. It has been a very rewarding and relaxing journey. From -70pips to 100pips to 250 pips and yet sitting down and watching how my final target will be hit at 1.4980 to round up a truly rewarding trade of 400pips.

 

If you are a visitor of this blog, you can read my first analysis here and the second here .

 

Now that the power of the ending diagonal has been confirmed and price moved down in a typical impulsive move, minor correction should be expected especially when a strong support is close.

 

My recent intra day elliot wave count shows that price has moved and making the second minor retracement (wave 4).

 

I expect price to move down from there to test the support zone indicated at 1.4950-1.4990.

 

If price doesnt penetrate the support in high momentum, price will consolidate or retrace.

 

Price is the key and the king. 

 

I will update you here

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Important psychological chart levels - forex trading signals best

Important psychological chart levels ~ forex trading signals best

1.30 price zone in EURUSD

Trading Important Chart levels

The Euro

found resistance at the Head and Shoulders neckline yesterday and formed a Three Drives pattern (see 1 hour chart). From this top, the EUR/USD moved down whereby the downside momentum increased today.

The hourly 200 SMA, the daily S1 and the weekly Pivot point provided temporary support for the Euro before the market moved lower to the psychological important 1.30 level.
Many stops can be anticipated below this major psychological level so that at least a temporary breach of this support level could happen to clear some stops. The 61.80 % fib extension at 1.3005 on the 4 hour EUR/USD chart got respected by the 4 hour candle starting at 8 a.m. GMT before the new 4 hour candle breached this important psychological 1.30 level (Timing setup).

The strong 5 min momentum candle at 1.30 p.m. shows the momentum created by the stop triggering and the follow through. The EUR/USD went lower to the next major support level at around 1.2957 created by the 100 % fib extension and the 200 SMA on the 4 hour chart and the daily S3, which supported the Euro US Dollar so far.

On the daily Euro chart we have a potential bearish "222" Gartley pattern.

4 hour Fibonacci extensions

Daily Gartley pattern

1 hour Head and Shoulders pattern 

 

5 min Neckline break, Momentum

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