The AUDUSD pair is currently testing a head and shoulders reversal pattern with huge potential. I've broken the analysis down into points likewise marked on the chart.
1) Head formed and is clearly defined.
2) The left and right shoulders are well formed. In general this is a well formed H&S pattern. A well formed H&S pattern such as this one, has statistically an 85% change of reaching it's project target.
3) The neckline has been created at the 2 swing low points of the head and shoulders and the price has dropped below the neckline. At this point, it is expected that the pair will again test the resistance level which is the neckline.
4) At this point, we can see that the pair is currently testing the neckline, which also happens to be the first Fibonacci retracement level, created by joining the right shoulder with the next swing low point created after breaking the neckline at point 3.
5) We can expect a downward potential of 350 pips, which is the distance from the head to the neckline.
6) A take profit can be set here.
7) Using simple extrapolation with trendlines, we can expect the target to be hit around July 16.
1) Head formed and is clearly defined.
2) The left and right shoulders are well formed. In general this is a well formed H&S pattern. A well formed H&S pattern such as this one, has statistically an 85% change of reaching it's project target.
3) The neckline has been created at the 2 swing low points of the head and shoulders and the price has dropped below the neckline. At this point, it is expected that the pair will again test the resistance level which is the neckline.
4) At this point, we can see that the pair is currently testing the neckline, which also happens to be the first Fibonacci retracement level, created by joining the right shoulder with the next swing low point created after breaking the neckline at point 3.
5) We can expect a downward potential of 350 pips, which is the distance from the head to the neckline.
6) A take profit can be set here.
7) Using simple extrapolation with trendlines, we can expect the target to be hit around July 16.
Trade active:
I currently have an open trade on AUDUSD using this strategy.
Comment:
I'm updating my target date to be between July 16 and Aug 6.
Comment:
I'm expecting some volatility in this currency pair, so I'm expecting to see some some teeth, but the overall trend should be downward.