By Russell Glaser
The daily chart for the EUR/USD shows a potential head and shoulders reversal pattern forming.
Following last week’s close below the January to May trend line the formation of a bearish head and shoulders pattern is beginning to develop The downward sloping neckline comes in today at 1.4120 near yesterday’s low which coincides with a 38.2% Fibonacci retracement (1.4150).
Judging from the chart pattern, a move following a breach below the neckline would take the pair lower by roughly 8 cents. However, a more likely target is the 1.3430 level. This price has technical significance as it has shown in the past to be both resistive in early January and supportive in mid-February. 1.3330 off of the August 2010 pivot (not shown) could also come into play.
Should the EUR/USD head and shoulders chart pattern fail to materialize, resistance to the upside is found at 1.4450, followed by the May high at 1.4940.
Forex Market Analysis provided by ForexYard.
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