EUR/USD
Last month I pointed out the possibility of not just one, but two H+S Tops within each other. More accurately, forming (2nd Shoulder at that time) a H+S Top with a H+S Top having already formed the Head...a Crowned H+S Top. You can see this on the Daily Chart above. I wrote at that time:
Expect further limited tests high before a turnaround. If the try higher becomes stronger then the concept of the H+S within a H+S is likely...in both cases they indicate currently weaker markets though after tries (extended in one case) higher.
That's what's happened. The market started by trying higher to the Neckline (currently 1.1891) of the smaller H+S Top, testing it but failing on two separate occasions, the second time with a Bearish Pipe Top. We then had a Key Reversal Down on the Daily Chart above a week last Thursday which signalled the completion of any tries higher and the test of the first lower target for the smaller H+S Top at point 'X'. It was also the day we closed for the first time under the Medium MA (currently 1.1705) as well as the first close under the larger Aug-to-date H+S Top's Neckline (currently 1.1670).
We've since been held up between the resistance from the Neckline and the support of the recent key 50% Fib at 1.1605. Effectively, we went into neutral for a week as we were in between the Medium MA overhead resistance and the Long MA support (currently 1.1271) with that 50% Fib acting as a holding support nearby. However, Friday we had a good looking KR Down on the Daily Chart above with the lowest close since July (just by one tic) so it looks like we may start an attempt lower as early as next week to fulfil the potential target for a full move down on the H+S Top. If that's the case then the target could be down at 'XI'...around the 1.1265 area. However, there is some significant support to overcome. Firstly, there is the 50% Fib at 1.1605, then the Lower Channel Line of the Bearish Channel (currently 1.1510) and then the band of Fib congestion between 1.1466 - 1.1510.
Even after these there are further supports but a more reasonable near term target to perhaps aim for could be the target for the possible Bear Flag we've formed over the last week. The target would be around 1.1425 and I've marked it with an 'X2'. Nevertheless, let's see if the market will start by overcoming the nearby 50% Fib and how it fairs at the larger support band. On the other hand, a temporary stay would be two consecutive closes over the Neckline and further questions would be asked with consecutive closes over the Medium MA whilst consecutive closes over the Upper Channel Line (currently 1.1787) may push the market into looking at 1.1900 again.
On balance, the bullet point moves to mildly Bearish, reflecting the KR Down on Friday but with MAs two and two down, it'll still be mildly Bearish I'm afraid, despite my inclination to go further.
Support is currently at 1.1605, 1.1573, 1.1510 - 1.1466, 1.1423, 1.1369, 1.1330, 1.1317, 1.1271 (dynamic), 1.1265 and 1.1216.
Resistance is currently at 1.1614, 1.1670 (dynamic), 1.1690, 1.1705 (dynamic), 1.1720, 1.1787 (dynamic), 1.1836, 1.1858 and 1.1880.
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