Structure: Breakdown | | Trendline | Reversal Pattern (H and S)
Observation: i. The Trendline indicated on the chart has been a significant factor in deciding the prevailing bias of participants in the market since December 2020 as price tend to follow in the direction of a Break above/below at any given point in time.
ii. Since the break above of trendline (Fr0.91400) happened in early March 2021, Price has found a niche above Fr0.92200 which has become a strong .
iii. is considered strong due to the number of times the price has rejected this level to the upside in the past (five times!).
iv. Even as this level is considered strong, I am in a dilemma as the Breakdown of the Trendline during last week trading session might either be a false Breakdown or an incitation of a further decline in the nearest future should the price decide not to respect the and do a Breakdown.
v. To be on the safe side for a rally continuation, I shall be looking to buy above Neckline which will also be a Key level @ Fr0.92750 for expectations.
vi. How to know if Breakdown is valid or not? When the price does not respect and break down the Fr0.92000 area then we look forward to correction of Breakdown to join the decline train.
vii . This been said, we can not ignore the Reversal setup forming on the as I see a Head and Shoulder pattern forming should price rally in the coming week (see chart below).
Trading plan: BUY confirmation with a minimum potential profit of 150 pips.
SELL confirmation with a minimum potential profit of 170 pips.
Potential Duration: 5 to 10days
NB: This speculation might be considered to make individual decisions on the lower timeframe.
Watch this space for updates as price action is been monitored.
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Past performance is not necessarily indicative of future results.