After Monday’s all mighty upswing, Tuesday brought us a bearish correction. So far, the size of this correction is very small and it seems that buyers are still in control of the situation. Today, we don’t have any major events in the macro calendar, so we expect that optimism will not go away and global indices will remain bullish.
We can see two inverse head and shoulders pattern on the DAX. The first one gave us the buy signal on Monday and the second one is being created as we speak. The bottom of the head is on the 23,6% Fibonacci level and the neckline is on the 11100 level. A breakout of the neckline will significantly increase the chances for another bullish wave.
Next, we have two setups with the EUR. Yesterday, the price of the EURUSD bounced from the upper line of the triangle but that wasn’t the only attempt to break this resistance. Buyers are trying again today but so far; the result is pretty much the same. Technically, the price is creating a head and shoulders pattern. Currently right shoulder is being created but the results should be out soon. A breakout of the red neckline will give us a signal to sell and a breakout of the upper blue line will deny the H&S pattern and bring us a mid-term buy signal.
The second setup is the EURGBP, which has recently been moving with grace, respecting the most popular price action principles. After a triangle and a pennant, we currently have a rectangle, which is a trend continuation pattern. Most recently, the price bounced from the lower line of the rectangle and the mid-term up trendline. A further breakout to the upside looks imminent.
This article was originally posted on FX Empire
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