EUR USD Hourly chart 10.04.09
First an update on the head & shoulders pattern i wrote about a couple of days back. The pattern is complete, its target was just achieved and the pair reversed from there. Head & Shoulders usually have a pattern suggested target equivalent of the vertical distance of the head from the neckline, which in this was 220 pips. On a break below the neckline, the target of 220 pips below the neckline was achieved, following which market sharply reversed higher.
The gains were not to be sustained though with price moving down again, but this time took support at the 1.3080-90 region, which is a support area on daily charts (shown below). A closing below this support area would be highly negative for the pair, giving much more support to the idea that the pair has resumed its long term bearish trend.
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