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EUR/USD to End Its October Correction with Double Top Reversal?

November 6, 2019 (Last updated on November 7, 2019) by

EUR/USD has formed a classical example of a double top pattern on its daily chart. It had started on about October 17 and had finished its development by November 5. The double top caps the corrective wave that had started back on October 1 inside a larger long-term downtrend experienced by the euro against the US dollar. Will this pattern spell an end to the bullish tendency or will it fizzle out? It is impossible to predict, but we can use the opportunity to set up a potential breakout trade on this currency pair.

The chart below shows the neckline and the two tops marked with the yellow lines. The cyan line marks my entry order, positioned at 10% of the pattern’s height below the neckline. I will place the take-profit at where the green line is. It is situated at 100% of the pattern’s height below the neckline. I will set my stop-loss to the high of the breakout candle or to the high of the preceding one if the breakout candle is trading mostly below the neckline. I won’t trade bullish breakouts from this trend reversal pattern. You can click on the chart to see its longer-term version:

EUR/USD - Double Top Pattern on Daily Chart as of 2019-11-06

I have built this chart using the ChannelPattern script. You can download my MetaTrader 4 chart template for this EUR/USD pattern. You can trade it using my free Chart Pattern Helper EA.

Update 2019-11-07 10:59 GMT: The currency rate broke through the neckline and my entry level today at 2:39 GMT. The trade opened at 1.10619 with stop-loss at 1.10923 and take-profit at 1.09660. Unfortunately, it looks like the pair is ready to pull back through my stop-loss now:

EURUSD - Double Top Pattern on Daily Chart as of 2019-11-07 - Post-Entry Screenshot

If you have any questions or comments regarding this double top on the EUR/USD chart, please feel free to submit them via the form below.

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