EURAUD Potential Head and Shoulders Trend Reversal

I must preface that this trade could still have room to the downside if we do not break above the previous swing. There is a larger support and flip zone down at 1.59 and generally these big areas are like magnets.

However, what we are seeing is quite intriguing. Price found support at the 1.60 level and you can see we are back at testing the previous swing level at 1.6120. This is the lower high that is valid. Basic market theory tells us that we are still in a downtrend while this lower high is intact.

Of course the opposite to a lower high is a higher low which is the basic foundation of uptrends.

If we pullback from here a bit, and then buyers step in to lift price above the previous lower high (1.6120), we will create our first higher low. Subsequently, the downtrend will then be nullified.

We will await the BREAK and CLOSE above this level to trigger a trade.

Take profit would be the 1.6260 zone, however there is a flip zone at 1.6200 that you should be wary about and see how price reacts there if the trade is triggered.