June starts with a correction on the EURUSD

In the last two months, EURUSD completely changed the trend and the sentiment. Sellers got beaten very badly and the price made new yearly highs. Such directional movements cannot last forever. Traders need to take profits sometimes and it looks like the time for that came now.

With the yellow rectangle we marked the short-term head and shoulder pattern, which is visible better on the lower timeframes (H1 and M15). This is a trend reversal pattern and is already active as the price broke the neck line (horizontal blue). The closest support now is 1.129 (green area) and it looks like we should get there soon. This is our most probable scenario at the moment, which as for now, should give us around 70 pips.

What will happen next? Well it depends from the further price action. In general, the long-term sentiment is positive. As long as we stay above the blue up trendline, the long-term trading signal is buy. From the technical point of view there are no signals that we should end climbing higher. That being said, we should pay a special attention to the price touching all important supports that we marked on the chart. Any bullish reversal pattern there can be potentially a nice trading opportunity.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis