EUR/USD Analysis - 1.15 Or 1.17?

EUR/USD spent last week in a narrow trading range of 1.16-1.17. The currency pair clocked a high of 1.1624 today before falling below the 1.16 handle. At the time of writing, it is trading at 1.1590 levels.

The technical studies show increased odds of a drop to 1.15 levels.

Daily chart

The above chart shows-

• Head and shoulders reversal
• Falling channel (support at 1.1524)
• The 5-day MA, the 10-day MA falling, show bearish bias, although the 100-day MA still sloping upward.

1-hour chart - Bearish flag breakdown

Weekly chart - Gravestone Doji-like candle

View

The spot looks set to test the 1.1524-1.15 levels over the next few hours, courtesy of the bearish flat breakdown on the 1-hour chart. Moreover, the breakdown adds credence to the gravestone-doji like candle seen on the weekly chart, which as per textbook rules, is a bearish sign.

Still, the drop to the 1.524-1.15 levels is likely to be short-lived, given the 50-day MA is sloping upward.

Only an end of the day close below 1.1524 (falling channel support) would strengthen the case for a drop to 1.1270 (head and shoulders breakdown target).

On the higher side, only a bullish break of the falling channel would open up upside toward the 1.20-1.21 levels.