CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

EUR USD Head and Shoulders Reversal or Simple Correction

Article By: ,  Financial Analyst
February 14, 2013 3:51 PM

EUR/USD (daily chart), as of February 14, 2013, has dropped further from its 14-month high two-weeks ago around 1.3700 resistance and its temporary recovery yesterday up to 1.3500 resistance. Today’s substantial fall in price has brought the pair close to key support around the 1.3300 price region.

While price is still comfortably within the bounds of a strong overall uptrend extending back to the July 2012 1.2040 low, today’s breakdown has also tentatively broken down below the neckline of a potential head-and-shoulders topping pattern. This pattern has its left shoulder around the 1.3400 area high in mid-January, its head around the 1.3700 area high in early February, and its right shoulder around yesterday’s 1.3500 area high. As head-and-shoulders patterns are considered potential reversal formations, this price action hints at further possible bearishness going forward.

A strong breakdown below 1.3300 support would confirm this bearishness, with a further breakdown below the 1.3200 area placing the current bullish trend in serious risk of reversal, with an initial objective around 1.3000 support. To the upside, only a breakout above 1.3500 would place renewed confidence in a bullish trend continuation, with further upside objectives once again around 1.3700 and then potentially towards the 1.4000 resistance area.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024