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Reversal Pattern on EUR/USD (January 8, 2014)
A double top has formed on EUR/USD’s 1-hour time frame and it seems that the pair has confirmed the potential selloff. It has broken below the neckline around the 1.3650 minor psychological level but is waiting for more selling momentum.
Stochastic is on middle ground at the moment, but is pointing upwards. This suggests that a quick pullback might still take place before the pair heads any lower. However, you can opt to enter at the break of the recent low around 1.3575 if you think the selloff will resume soon.
Shorting on a pullback to the 1.3650 area with a stop above 1.3700 and a target of around 200 pips, which is the same height as the formation, could yield a good return on risk.
By Kate Curtis from Trader's Way
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