A week ago (20.10) the price of the EURAUD pair set the maximum of this month at 1.6828. The quotation on the following day was in the range of the preceding candle creating a two-candle formation – inside bar.
The quotations of the next day led to the breakdown from the formation and after several attempts to retest the defeated bottom level of the formation, the price is heading south.
In the H4 chart we can see the characteristic silhouette of the H&S formation (Head&Shoulders). The line drawn through the last two minima forms a neck line. H&S is a trend reversal formation, and crossing the neck line is often a signal for declines.
The course of today’s quotations indicates a high probability of continuation of the declines initiated during the Asian session. The most convenient place to take the sell position would be retest of the neck line… If it happens…
The first supply target may be a demand zone at 1.6500. A decrease in the order volume should be taken into account, as this is a highly volatile pair and movements exceeding 200p per day are not uncommon.
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