Over the weekend, I mentioned the potential for a head and shoulders pattern on the EURGBP daily chart. At the time, the pair was trading at 0.7830 and thus required an “additional push higher to form the right shoulder.”
Those were my exact words in the most recent weekly forecast. With the third trading session of the week behind us, we can see that the pair has indeed pushed higher and is currently retesting the 0.7930 handle.
Not only did this level cap advances in both February and March, but it is also the 50% Fibonacci retracement when measuring from the April high at 0.8116 to the April low at 0.7734.
While this is far from a confirmed head and shoulders pattern, the fact that yesterday fell short of overtaking 0.7930 is an important piece of the puzzle. If sellers can maintain pressure in this area, we could see the right shoulder form over the coming sessions, giving us a technical structure worth a potential 400 pips.
The next few sessions should tell us a lot about the future direction of the Euro cross, and although a close above 0.7930 wouldn’t negate the pattern altogether, it would make it more difficult for it to materialize fully.
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