During the past few weeks the EUR/USD pair has been
stuck within tight range, but finally dared to leave it. The pair has formed a „head
and shoulder pattern” and last week broke the „neckline”, but at the same time
moved below the upward trend line, that had started from April.
Indicators on the daily chart confirm that the downward bias will remain decisively
intact. The price has crossed to below the 20-day SMA while RSI and stochastic
had turned to north, but remain within their extreme oversold territories.
The pair has bottomed last week at 1.1722, which is very close to the support
line at 1.1662 (the August low). Thus the pair is vulnerable to extend its decline
towards 1.1460 (a resistance turned to support now). To turn bullish the pair
will need to advance above 1.1880 (former support and new resistance). But as
long as the pair is under this level, the bearish outlook remain intact.