Week ago I described situation on CHFJPY and the possibility of creation a Head & Shoulders formation and in the last sentence I wrote: “But before that we have to finish drawing the right arm and CHFJPY should reach the green zone at 115.20.” (read all)…
So it happened, that is, the right arm was finished. Now for the Head & Shoulders formation to be completed the course should reach the neck line (orange) and break it, and after successful breaking of the neck line we can expect dynamic movement to the south even in the vicinity of 106.40.
If the downward trend is fulfilled, the pair will be on the way to meet the trend line (blue) joining the minimum of 22.09.2016 with this year’s minimum of 17.04 where price can make a bullish pull back to the broken neck line.
On H1 chart, we can see that last week CHFJPY moved in a triangle formation from which it broke thru the bottom at the end of the Friday session and has already made a quick retest of the broken side of the triangle what also favours our bearish scenario.
Of course, for Sell orders, the level for Stop Loss is the shoulder line (green zone), which permanently breached can mean negation of our bearish H&S setup.