Daily Head and Shoulder pattern - hot forex trading signals

Daily Head and Shoulder pattern ~ hot forex trading signals

EURUSD Technical Chart Analysis 

Head and Shoulder Analyzed

Daily Head and shoulder pattern

The daily Head and Shoulder pattern got triggered due to the gap down last week. On Monday, May 7, we had a nice retest of the neckline, which acted as resistance and led to a sharp price drop. The market took out the low of January 23 (stop fishing) and so far respected the support zone (analysed in EUR/USD Market Analysis (14.05.12)).

Neckline break 

Below the market is the weekly trend line (low of June 2010 and January 2012) which could act as support. The classical target of the Head and Shoulder is the length of the head (A-B) projected from the neckline break (1.3061) at about 1.2551, which would also clear out the striking low from January at 1.2624.
However, it is to early to make  these assumptions and further price action will give hints of what to expect.

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False and True Breakout Patterns - forex gold trading signals

False and True Breakout Patterns ~ forex gold trading signals

Euro Dollar Breakout

False and True Breakout Patterns

On the weekly time frame we see that EUR/USD closed right at the weekly trend line (respected it). However, it is unclear how strong the support from the weekly trend line (low from June 2010 and January 2012) will be during the next weeks.

Weekly Support Resistance trading

Timing of the Breakout

On the 4 hour chart EUR/USD strongly bounced back from the support zone at 1.2641 and in the following EUR/USD moved up to each resistance level (EUR/USD Market Update 18.05.12), touched it (respected it) and broke each resistance level in the beginning of the succeeding 4-hour candle (Timing) (see also 5 min chart below).

Finally, EUR/USD moved up to the weekly trend line (orange line) and found resistance there, also due to the 61.80 % fib retracement of the recent swing down at about 1.2783, daily R2 and the 100 % fib extension from the recent swing up from 1.2641 to b at c at about 1.2790 (see 5 min chart).

4 hour chart V shape turn around Trading pattern

Breakout candle

On the 5 min chart, we see that all three breakout candles occurred in the beginning of the succeeding 4 hour candle (12, 4 p.m. 8 p.m. Timing) after each prior 4 hour candle touched the resistance level. The breakout of the breakout candle 2 did not get confirmed on the 5 min chart  so that in the following price moved back in the consolidation. Another nice three wave consolidation took place before the next breakout occurred. Finally, EUR/USD closed around the weekly trend line.

5 min false and true breakout chart analysis

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