EUR/USD Technical Analysis: Major Topping Pattern in the Works?
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- EUR/USD Technical Strategy: Flat
- Euro may be carving out a large Head and Shoulders topping pattern
- Confirmation needed before an actionable short trade setup emerges
The Euro may be carving out a large Head and Shoulders topping pattern that, if confirmed my open the door for a drop below 1.14 against the US Dollar. Prices completed smaller H&S top in late September. The larger formation still requires confirmation to become actionable however.
From here, a daily close below the 1.1711-21 area (October 5 close, 38.2% Fibonacci retracement, H&S neckline) initially exposes the 50% level at 1.1606. Alternatively, a reversal above the 23.6% Fib expansion at 1.1899 sees the next upside hurdle in the 1.2041-70 zone (38.2% expansion, August 29 high).
Whether the H&S pattern plays out or not, prices are too close to immediate support to justify entering short from a risk/reward perspective. With that in mind, opting to remain on the sidelines and wait for greater clarity seems prudent for the time being.
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