- The current drop is natural after two false breakouts above the R1!
EUR/USD is trading at 1.2106 level after failing to take out the 1.2139 static resistance. The price accelerates its sell-off as the USDX edges higher. Technically, the pair was somehow expected to slip lower again in the short term after the most recent rally.
The bearish bias remains intact despite the last swing higher. A USDX's strong rally will definitely push EUR/USD towards 1.2 and 1.19 psychological levels. From the technical viewpoint, EUR/USD maintains a bearish outlook as long as it stays somewhere below the 1.22 psychological level.
EUR/USD Rejected By Strong Obstacle!
EUR/USD was rejected by the R1 (1.2139) and now it approaches the descending pitchfork's median line (ML). The false breakouts above the R1 could send the rate down towards the Pivot Point (1.2046).
Still, the drop could be only a temporary one. We need confirmation given by a strong pattern that EUR/USD will drop towards 1.19 psychological level. Personally, I've told you that the pair could resume its corrective phase towards 1.19 and lower to the 61.8% retracement level after the price's drop below the 50% retracement level and through the descending pitchfork's lower median line (LML).
This scenario could take shape if EUR/USD drops and stabilizes under the median line (ML) and below the Pivot Point (1.2046).
Forecast!
Yesterday's false breakout above the R1 represented a selling signal. The first downside target stands at the median line (ML), near the 38.2% retracement level.
A new false breakout above the R1 or a temporary sideways movement followed by a bearish reversal pattern could really announce a larger drop.
