Trading the EUR/USD currency pair

This trade on the EUR/USD has been delivering some excitement over the last couple of weeks. On the chart below you can see that the price broke out from the down ward channel which started to form from the head and shoulders pattern.

The breakout did not reach my stop level at 1.1880 and the trade is still short at this stage and a lot of this downward pressure on the EUR/USD will come from the Dollar strengthening and the long-awaited tax bill in the US being favourable to their economy.

Scenario 1.

The chart below depicts a possible outcome over the next couple of days.

Scenario 2.

The chart below shows a classic head and shoulders pattern being broken and the pattern is no longer in play and a new technical set up is emerging.

The chart shows that the price has been moving lower in a channel and broke out of this channel moving higher. The price might move lower from here to the neckline area before moving higher and then in effect forming an inverse head and shoulders with target price around 1.2000.

All chart sources: Bloomberg