I hope that I will be able to explain the depicted 'chaos' on the chart in words for everyone to understand, if you have any questions let me know.
Currently price is at 1.1655, this was a very significant level for price to close yesterday as its just above the bearish candle from 21.05.2018, hence, indicating that the 1.1550 to 1.1600 level is holding as support - at least for the medium term.
On the chart I have illustrated a potential bearish H&S pattern in red. The right shoulder falls just below the trend line drawn from the left shoulder. The high of the right shoulder is the high of this month at 1.1852, thus, a very significant level as I will now explain in scenario 1.
Scenario 1: Price reaches the 1.1852 level, however, it gets rejected. Applying the measured move from 1.2556 to 1.1508 and using it to measure a target objective, we reach the GAP formed in March, 2017 after the French elections.
If price holds and reverses within the GAP zone, we can measure the next target objective by applying the measured move of the impulse leg which formed the bearish H&S pattern, hence, by doing so we reach the 61.8% retracement at 1.2598 as well as the yearly R1, and testing the 15 year intermediate support trend line (black diagonal line) as support or resistance.
If the intermediate support trend line turns to resistance than we will have to set our scopes lower and start targeting 'parity' levels below.
By applying the measured move from 1.3994 to 1.0340 to measure a target objective, we reach the 0.8817 level, which, too, is significant because its the level where price broke through resistance in 2002, and those levels were never tested as support, instead price just sky rocketed from there.
Scenario 2: Price is able to breach the 1.1852 level and is able to reach the Fibonacci confluence zone consisting of the 38.2% retracement level measured from 0.8563 to 1.6038, and the 78.6% retracement level measured from 1.3994 to 1.0340. The projected measured move from 1.1508 to 1.3260 is the measured move from 1.0340 to 1.2092.
After reaching the 1.3200 levels, price retraces to test the previous intermediate support trend line for support after the breakout, and if it holds, per an AB=CD pattern price eventually reaches past the 1.4000 levels all the way to the 1.4400 levels.
In summary, the key levels for the short term are the 1.1852 level, rejection there will send price to close the GAP below. Break and close above and we can target new highs for this year.
If price reverses to the upside from the GAP zone, we can target the 1.2590/1.2600 levels, again. From there a rejection could send this market well past parity below, or test previous highs above in the 1.3000/1.3200 zone.
Keep an eye out for the levels as described and go from there.
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