It's been a quiet trading week for me, as most of the currency pairs I watch have been retracing back in the opposite direction of their predominant trends.  I welcome times like these, though, because even though I don't have any trades on, a pullback in a trend means that a good opportunity may be just around the corner.

EUR/USD may be presenting one such opportunity in the near future.  The overall trend on the daily chart is still down, so I've got a short bias, and we've had a few strong up days, with today finishing strongly down.

Zoom in to the 4 hour chart and see that after reaching its high for today around 1.3080, the Euro has fallen and tested an area of support around 1.2800 that was tested about a day earlier.  In fact, we could be seeing a head and shoulders pattern forming on the 4 hour chart.  We should know tomorrow whether the right shoulder will form and complete the pattern.

I'm going to enter a sell order at 1.2790.  If the Euro drops to this area and my sell order is filled, price will have broken through the neckline of the head and shoulders pattern, broken the support around 1.2800, and will be moving in my direction.  Hopefully if this happens, it will continue moving south and give me a win.  Of course, I could be wrong - we'll see what happens.

• Short Entry: 1.2790
• Initial Stoploss: 1.2930