FX.co ★ Head and Shoulders pattern activated in EURUSD.

EURUSD broke below the key support of 1.1750 and the neckline support of the head and shoulders pattern. This has activated the head and shoulders pattern.

Red lines - head and shoulder pattern

Black line - neckline support

EURUSD has broken below support. This pattern points to a move as big as the height of the head. This means that as long as price is below the neckline which is now resistance, we expect price to move lower towards 1.12-1.10. The only thing that is a warning sign for bears is the bullish divergence in the RSI. Bears need to see the RSI making a new lower low in order to strengthen their scenario.

As can be seen in the weekly chart above, price is approaching the important 38% Fibonacci retracement of the entire rise from the 2020 lows. Breaking below 1.1685 will increase the chances of a move lower adding to the bearishness of the head and shoulders pattern.