Technical Analysis – EUR/USD flirts with the neckline of head and shoulders pattern

Greece euroEURUSD is close to breaking the 1.2180 barrier, which is acting as a strong neckline of an inverse head and shoulder pattern in the 4-hour chart. Any advances above this obstacle could take the price even higher as the formation is a reversal sign. The RSI indicator is pointing upwards after the rebound on the 50 level, while the MACD is trying to surpass the trigger line.

On the upside, the price could attempt to overcome the 1.2180-1.2190 area and retest the 1.2220 barrier. If successfully broken, the door could open for the 1.2287 barrier.

A move to the downside could find immediate support at the 200- and 40-day simple moving averages (SMAs) slightly above the 1.2100 handle. If the latter cannot halt bearish movements, the next target could be the lower surface of the Ichimoku cloud at 1.2075 before slipping to 1.2022.

Turning to medium-term trading, the outlook has been bearish-to-neutral over the last couple of months and only a decisive close above the neckline of the pattern (1.2180) could resume the bullish picture.

Origin: XM1

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