Head and Shoulders pattern and Neckline

Chart Pattern targets

Neckline of the Head and Shoulders 

Euro US Dollar

triggered the Head and Shoulders pattern with the break of the neckline and the Euro moved lower to the Head and Shoulders target, which is marked on the chart with the 100 % Head and Shoulders target. From there, the market retraced back up to the Head and Shoulders neckline and formed a kind of Wedge pattern / Three Drives pattern before the EURUSD reversed and moved down again (right side of the chart).

Overall, the two hammer candle stick pattern (right side of the hourly chart) and the 61.80 % as well as the 100 % Fibonacci extension levels on the 5 min chart helped us in predicting support and resistance zones.

The first hammer candle  occurred at the consolidation price zone of the prior flat "overnight" consolidation pattern of the 21th of October, which acted now as support. The price up moves after the first and the second hammer candlestick created the kind of Wedge/ Three-Drives pattern and market reversed to the downside after the Euro touched the brown neckline of the Head and Shoulders  at around 1.3080.

As often, market penetrated an important Chart level like the neckline and the high of the recent overnight consolidation zone of the 19th of October to clear the stop orders and trigger the limit breakout orders before reversing strongly (False Breakouts - Market Manipulation).

1 hour Head and Shoulders pattern, Fibonacci target

The Wedge / Three-Drives Pattern is better visible on the 5 min chart. Furthermore, we had two Head and Shoulders pattern on the 5 min chart, see the red lines marking the Head and Shoulders pattern. Both patterns worked out relatively well.

The useful Fibonacci extension levels (61.80 and 100 %) are also visible on the 5 min chart below.

5 min Head and Shoulders pattern and Wedge

See also Chart Pattern Manipulation to understand that famous chart patterns are tricky.

The Technical Chart Analysis of the trading days before below

The EURO

found support at the Head and Shoulder price target (100 % fib extension of the Head and Shoulders  height moved to the neckline break), daily S2 and 100 % Fibonacci swing projection. Pivot Points and Fibonacci extension levels only held the market temporarily. The red ellipses underlined the Breakout Timing Strategy (Break of support of the new hourly candle after previous hourly candle closed bearish at the support level).

1 hour Head and Shoulders pattern target

5 min Three Drives pattern

The Developing of the Head and Shoulders pattern

Head and Shoulders neckline and Fibonacci Analysis

on hourly chart but neckline and daily S1 held the market so far. The Euro found resistance at the weekly S2.

In today's session the Euro often found resistance and support at 61.80 % and 100 % Fibonacci extension levels and market often cleared the stops (stop fishing - false breakout) below recent lows (see red arrows on 5 min chart).


The Fibonacci Extension and Retracement levels as well as the Pivot Points revealed important Support and Resistance zones (5 min chart analysis)

1 hour  Head and Shoulders neckline

1 min  Head and Shoulders pattern

5 min Fibonacci levels 

Typical Consolidation Pattern

Consolidation Price Zones 

Consolidation Patterns with three Swings

IF you observe the consolidation patterns (green circle) then you will recognize that most of them consists of three waves/ swings (Typical consolidation pattern) before the consolidation terminates and price renews its prevailing trend. Very often these consolidation price zones also provide some support/ resistance when price captures this price zone again for the first time (orange arrow). More information about Consolidation patterns and Consolidation price zones are at: Support and Resistance Chart Patterns

5 min Typical Consolidation Pattern

Three swing Consolidation formation

The Chart pattern analysis below again shows the typical three swing/ wave consolidation patterns (The two large ellipses illustrate the typical three swing consolidation formations), followed by the breakout of price in trend direction after the termination of this consolidation formation type.

Consolidation price zones in the EURUSD

On the 5 min chart of the EUR/USD  below we see the formation of the pin bar candlestick pattern at the price zone of the recent consolidation pattern.The Euro moved up strongly and price momentum recedes during the formation of the larger consolidation pattern at the daily R2 Pivot (green ellipse). The price breakout of the larger consolidation  (red ellipse) occurred at the beginning of the new hourly candle (11 a.m.) (Breakout timing).

However, the price breakout was very shallow and market retested the consolidation price zone (blue arrow) before the Euro started to moved up further to the next smaller consolidation pattern at the daily R3 Pivot, the weekly R2 Pivot and the 100 % Fibonacci Extension level.

5 min Euro Analysis, Pin bar, Consolidation pattern

Typical three swingconsolidation/ continuation pattern on the 5 min chart


Potential Inverted Head and Shoulders pattern

The Euro moved lower and created a typical three swing consolidation pattern around the 100 % Fibonacci Extension level. Price broke out of the three swing Consolidation pattern at the beginning of the new hourly and 4-hourly candle (red ellipse), which is often an important Breakout Timing (GMT).


The EUR/USD found support at the 61 % Fibonacci Extension of the recent swing down moved to the high of the consolidation pattern. Market formed  a kind of inverse Head and Shoulders pattern, which might led to the price reversal of the EUR/USD to the upside

5 min  Inverted Head and Shoulders pattern