Thursday, March 27, 2014

Picture Perfect Head and Shoulders

by Marc Chandler

This Great Graphic was created on Bloomberg.  It is the euro against the Australian dollar.  There appears to be a textbook illustration of a head and shoulders pattern.  The euro closed below the neckline yesterday at A$1.50 and has seen some follow through action today. 

From the head to the neckline is about 8 Aussie cents.  That suggests a measuring objective of near A$1.42.  However, the next immediate target is A$1.4730, a retracement objective of the Nov-Jan euro rally.   It is not uncommon for the market to retest the neckline after violating it, but this looks to be a clean break. 

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