The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
EUR/USD falls below head and shoulders neckline
EUR/USD fell sharply yesterday in the wake of the latest European Central Bank (ECB) meeting, taking the price back below the crucial $1.1662 support level. That level is key, because it denotes a head and shoulders neckline on the wider daily timeframe. With that in mind, this provides us with a clear bearish bias to play with.
Given how extended this downside move is, it makes sense to await a retracement of yesterday’s sell-off, or else a continuation pattern such as a pennant or flag to trade around. Ultimately further downside is expected, but with our most recent swing high all the way up at $1.1837, it makes sense to see if we can get some form of consolidation or retracement to provide us with a closer stop loss.