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.