EURUSD - HEAD AND SHOULDERS, SELL "TRAP" OR GENUINE?

Hey Traders, if you are into chart patterns you can clearly see the Head and Shoulders pattern forming on the EU. Most traders will identify this and immediately look for sells at the right shoulder level(1.0705). Chart patterns can be predictable but in the right context and situation. I would not be selling without confirmation solely based on a pattern. We have to consider where price will likely head to IF it in fact sells off. Traders selling at the RS level may be "trapped" as price temporarily pulls back and then proceeds to the supply level above at around the 1.0715/24 area and/or tests the high(1.0756). Monitoring price action around the RS level(1.0705) to determine how to trade this coming into the London session. Best tip: A chart pattern has a higher chance of playing out if it aligns with an area of "significance" e.g. supply/demand. The RS IS JUST BELOW THE MOST RECENT SUPPLY LEVEL. Happy trading
DIONNG

Comment:

Hey Traders, yesterday we had selling activity happening around the right shoulder of the H & S pattern between 7:15 and 11:00 in a 15 pip range with price finally heading south to support(1.0665/13:30) and bouncing higher at 14:15. Supply is at 1.0715-1.0725. By definition, this H & S is a bearish pattern, however we had a bounce from support yesterday. A test of 1.0750 would not surprise. First resistance is supply at 1.0725/1.0715. Caution, we are in the middle here. Price can go either way. Box it in and see where it breaks out.
DIONNG

Comment:

Hey Traders, did this make you rethink some things? Chart patterns should never be used on their own to determine a direction of price. They are one of many things to consider in determining price direction. Hope you all got something from this example.
DIONNG

Comment:

Trade idea - Hey traders, the market has shown it's hand. Most pairs against USD went higher. Traders are livid they missed this big push higher and are looking for a "discount" to BUY. Thing is, there may only be a 20% discount before bullish price action continues to push prices higher. Look for "confirmation" BUYS when and if price gets to the 50%-61% "discount" ,"FIB." level. The market makers know this is the level most traders will be looking to buy(1.0795/75). Avoid getting "trapped" in a liquidity sweep whereby price bounces off the 1.0750 area instead. Happy trading.
DIONNG