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#EURAUD has now tested major support after completing the larger head and shoulders pattern. Will the price now reverse to test the neckline?
Watch the video to learn more…
Daily Chart
EURAUD has rejected the major support zone we outlined in our previous EURAUD bearish downtrend video. We saw that the price on the daily time frame was forming a large head and shoulders pattern. When the pattern broke the neckline we looked for the market to make a measured move back to the major swing lows around 1.5400.
If the price is going to retest the neckline of this large head and shoulders pattern we would expect a retracement phase to form on the weekly trend. This will cause the daily and 4hr time frame to begin to form higher highs and higher lows. We can see from the chart currently that the price has broken through the previous swing highs suggesting a reversal is likely.
The 4hr Time Frame
As we can see from our trading time frame the price has clearly made a new high breaking through the trendline resistance. This could offer us some short term trading opportunities.
If the price retests the breakout highs and begins to form bullish price action or bullish reversal patterns on a lower time frame we can look for long ideas.
Alternatively we can look for the market to retest the minor demand zone where we saw strong buyers enter the market. If the price reaches this level we can look for long opportunities.
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