DXY, EUR/GBP, EUR/USD: H&S Patterns Underway: Levels & Targets
DXY breaks neckline and begins oversold bounce.
• Price action ending January broke down below technical support and the neckline of a head and shoulders top at the round number of 100.
• There is technical risk of a larger retracement to the 200d moving average support at about 98.
• Provided the DXY remains below the right shoulder highs and 50d moving average of 101-101.50, this technical top pattern remains influential and bearish in the near term.
EUR/GBP forming right shoulder
• EUR/GBP began rolling over from a lower high starting in February. This may be the right shoulder of a head and shoulders top.
• Strong support at .83300 from the neckline, trend line and 50d moving average must be broken to confirm the top.
A break below support suggests EUR/GBP will fall to about .78500.
EUR/USD attempts to confirm H&S bottom
Spot EUR/USD is attempting to break the neckline at 1.08 to form a head and shoulders bottom.
• A close through 1.08 is bullish and points up to the declining 200d at about 1.10, 1.1080 and possibly 1.1255. The 50d sma should catch up to offer support.
• A drawback to this pattern is the lack of bullish (overbought) momentum in the rally from the 1.03’s double bottom. The next rally should produce an overbought trend to increase conviction.