EUR/USD: Busted Bearish Head-and-Shoulders Becomes Bullish Head-and-Shoulders?
|Last week, we highlighted the bearish head-and-shoulders pattern forming on the US Dollar Index. With the euro making up nearly 60% of the dollar index, it’s not surprising that a similar, inverted head-and-shoulders pattern is forming on EUR/USD, as we’ll see below. That said, the longer-term context of the EUR/USD setup makes it particularly interesting.
Specifically, the current inverted head and shoulders pattern on the EUR/USD daily chart, if confirmed, would mark a failure of the well-defined traditional head-
As we hinted above, the false breakdown on the weekly chart corresponds with an inverted head-and-shoulders pattern on the daily chart. This pattern, which is equally well-defined, may mark the end of the near-term bearish trend. If confirmed by a break above the neckline near 1.1700, this pattern would suggest a “measured move” objective of 400 pips, or up around 1.2100.
There’s little in the way of traditional economic data on the calendar from either the US or Europe this week, though traders will key in on ECB President Mario Draghi’s speech on the future of economic policy in the euro area tomorrow, as well as the Flash PMI readings from the Eurozone on Friday.
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