H&S in the EURAUD
Hi all, I'm only a few months into TA but thought I'd try my hand.
As you can see the EURAUD appears to be forming the right shoulder of the H&S pattern I have put up here.
The RSI on the monthly, weekly daily, and 4 hourly all have room to move up some more to allow this to happen, while the smaller values suggest it will step its way there a little. Exactly how big the right shoulder will turn out to be I am not sure but there is a treand line to suggest it won't go much higher than that. Also volume is decreasing as the right shoulder is forming but we need to be looking for an increase in volume once it breaks below the neckline of the head and shoulder pattern as confirmation. This may take a couple of goes at breaking through as it will have support of the MA50
The target for this movement is in the red trend line that comes down from the neck of the H&S and sits at around 1.58500. I don't do stop losses unless its a moving one, so I won't advise on that.
You'll notice a blue trend line on the chart, RSI & MACD signifying a divergence and therefore a likelihood of change in direction. From what I've seen, is that a true divergence with the RSI usually has three tops and looks a lot like what we're seeing now. 1st top is second highest on chart but highest on RSI. 2nd top is highest on chart and slightly lower on RSI. While 3rd top is slightly lower than 1st top on chart but lowest on RSI. Which if combined with H&S will be part of the confirmation of the breakout. There is another name for this, when more than one indicator agrees but I don't know it.
What all of this means is that we could be at a current top and are therefore headed to the down side of the EURAUD and I will try to put the weekly chart in to show you some context
You will also see some pink trend lines which was a possible bear flag but has broken to the upside and technically invalidates it. But I have also seen where the chart can pop out of what we think is going to happen only to have it confirmed at a slightly later date.
Happy trading to you all.
As you can see the EURAUD appears to be forming the right shoulder of the H&S pattern I have put up here.
The RSI on the monthly, weekly daily, and 4 hourly all have room to move up some more to allow this to happen, while the smaller values suggest it will step its way there a little. Exactly how big the right shoulder will turn out to be I am not sure but there is a treand line to suggest it won't go much higher than that. Also volume is decreasing as the right shoulder is forming but we need to be looking for an increase in volume once it breaks below the neckline of the head and shoulder pattern as confirmation. This may take a couple of goes at breaking through as it will have support of the MA50
The target for this movement is in the red trend line that comes down from the neck of the H&S and sits at around 1.58500. I don't do stop losses unless its a moving one, so I won't advise on that.
You'll notice a blue trend line on the chart, RSI & MACD signifying a divergence and therefore a likelihood of change in direction. From what I've seen, is that a true divergence with the RSI usually has three tops and looks a lot like what we're seeing now. 1st top is second highest on chart but highest on RSI. 2nd top is highest on chart and slightly lower on RSI. While 3rd top is slightly lower than 1st top on chart but lowest on RSI. Which if combined with H&S will be part of the confirmation of the breakout. There is another name for this, when more than one indicator agrees but I don't know it.
What all of this means is that we could be at a current top and are therefore headed to the down side of the EURAUD and I will try to put the weekly chart in to show you some context
You will also see some pink trend lines which was a possible bear flag but has broken to the upside and technically invalidates it. But I have also seen where the chart can pop out of what we think is going to happen only to have it confirmed at a slightly later date.
Happy trading to you all.
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