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AUD:NZD - Head and shoulder potential

AUD:NZD - Head and shoulder potential

Hi,

It's early days yet but AUD:NZD has the potential to complete a text book looking inverse head and shoulder pattern

To complete the setup from here, price would need to leave Friday's low intact and then rally to break above the dashed neckline.

The other interesting thing about this set up is that it occurs at the right place to represent the conclusion of an ABC correction. Readers may recall that I posted a Fib cluster set up for an ABC buy in this pair at the low which now forms the potential left shoulder. This failed when price dropped down to the Head.  Could it be second time lucky with this formation?

Another feature of this pattern is that a break past the neckline runs straight into the resistance of the previous low at A. This is a common reason for failure of these setups. Some traders would wait for price to overlap back past the low at A before buying. An overlap through A would increase the likelihood that the move down from the peak at X has been corrective rather that the start of a major move down.

If the setup is triggered, I'll post some thoughts on trading strategy

Cheers

Ric