EUR/USD Price Analysis: Forms head-and-shoulders pattern
|- EUR/USD closed below the 50-day SMA on Wednesday.
- The pair forms a head-and-shoulders bearish reversal pattern on the daily chart.
EUR/USD is trading near 1.2094, representing a 0.11% drop on the day.
The daily chart shows the pair has carved out a head-and-shoulders pattern with the neckline support at 1.2052. A close below that level would confirm a bearish reversal and open the doors to a 300-pip fall (target as per the measured move method).
A drop to the neckline support looks likely as the 14-day Relative Strength Index is flashing a bearish signal with a below-50 print. The pair closed under the 50-day Simple Moving Average (SMA) on Wednesday, the first violation of the key SMA since early November, signaling the path of least resistance is to the downside.
A close above 1.2190 (March 22 high) is needed to put the bulls back into the driver's seat.
Daily chart
Trend: Bearish
Technical levels
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