This is an update to the EURGBP Head and Shoulders setup that I had pointed out in the previous Weekly Forex Watch list post.
The chart below is what i had posted in my last post. I was looking for price action to break above the neck line of the Head and Shoulders pattern and come back down to retest it.
On the retest i was looking to see if price can print a Bullish candlestick signal. This would confirm 4 things for me.
- By waiting for a pullback back to the neckline would confirm that price is not over extended and that i’m not buying at the top.
- By showing bullish strength and bullish candlestick signals would confirm that the pull back is only profit taking and not a sell off
- By waiting for the pull back it would give me a better Risk to Reward
- i’m entering the market upon confirmation and not on anticipation.
The chart below shows the price action post my analysis
Price presented two opportunities to enter the market. Though i would consider the first opportunity not strong enough. However on the second pull back Bulls showed strength via the Bullish Engulfing candle stick.