EUR/USD: potential H&S pattern
As can be seen from the weekly chart, EUR/USD is currently forming a head-and-shoulders pattern with a top at $1.3710 and a neckline currently around at $1.2785. Analysts at major banks, however, have diverse opinions concerning this technical pattern.
Strategists at TD Securities expect the pair to break below the neckline in the next few weeks. In their view, the formation targets a drop of almost exactly 10 big figures from the breakdown point (in other words, a little under $1.1800).
Meanwhile, ANZ strategists remain critical: “Firstly, the break is yet to occur. Secondly, the pattern is forming in mid-range, not at an extreme (so no reversal) and is likely to disappoint. We suspect a break will prove to be relatively benign as broader range trading persists. A move above $1.3035 will further reduce the downside risks and favor range trading”.
EUR/USD is consolidating around $1.2930 as of writing.
Chart. Weekly EUR/USD