EURUSD has traded in the same 500-pip range since December.
We saw the rally up to 1.1030 and even got a confirmed bearish fakeout on February 2nd.
However, this latest bounce from the December trend line casts a bleak shadow.
That trend line currently sits at 1.0540 could be the neckline of a 500-pip head and shoulders pattern.
As you may know, a head and shoulders is a bearish reversal pattern.
That said, a daily close below 1.0540 is needed to confirm it.
Furthermore, you’ll want to watch the 1.0480 pivot, as that’s been a key factor for EURUSD since November.
Interestingly enough, the measured objective of this potential head and shoulders pattern resides just above parity, or 1.0000.
That’s interesting because parity is often a magnet in trending markets.
As for today’s price action, the EURUSD is carving what could be a bearish engulfing candle.
It’s also breaking below the short-term trend line from February 27th.
If today’s action holds up and EURUSD closes below 1.0540 in the coming days, we could have a 500-pip trade set up in March.
But remember that a 500-pip move in any market will have bumps along the way and will likely take weeks to play out.
Lastly, this is still a “potential” head and shoulders, as a close below the neckline is required to confirm it and activate the parity measured objective.
