The head and shoulder pattern is one of the bearish reversal chart patterns that can not be ignored. More so if you have other indicators in the chart to confirm your forecasts.
In this analysis, we look at the AUD/USD pair on the 4-hour chart.
A Head and shoulder pattern is a pattern with three vertices or bottom points in a certain price area, but the second apex or bottom point is higher or lower than the other two vertices or bottom points. Head and shoulder patterns can be used for either top or bottom reversals.
AUD/USD 4 Hour Chart.
Overall the pair has been on an unrelenting uptrend pushing up all the way to almost reach the overbought zone in the RSI.
It wasn’t meant to be though, the pair lost its fire around the price point – 0.71599 and got trapped in a range that ran until 2nd January 2022.
As it stands, we have a complete head and shoulder pattern on the AUD/USD 4-hour chart, and the RSI is also slightly below the RSI 50 level.
Will the AUD/USD break past the head and shoulder neckline? And if it does, how far can it go?
I too really want to see what happens afterward.
Another pair to keep a close eye on is the USD/CAD
USD/CAD Daily Chart.
For more than 1 year now the USD/CAD has been trapped in a range each time making a higher low when it reaches the support and a higher high at resistance.
Though it has been dropping rapidly since May, it has suddenly reached the support zone and the RSI on the daily chart shows a bend upwards.
Is there a chance that from today onwards the pair May begin another run on the upside?
Or is it likely to drop as sellers keep setting in as we have seen in the past few weeks?
I’m neutral on this but guess what I’ll do if I decide to trade the pair.
I’ll wait until it crosses SMA 200 to the top then open a long position.
Which of the two pairs are you likely to trade today?
Let me know in the comments section. Read more.