EURUSD looks as though it may once again fall under heavy selling pressure to end the week. After an 860 pip rally from the April 13th low, the most liquid currency pair in the world finds itself struggling at the 1.1260 key handle for the third time this month.
At the moment the pair is carving out what appears to be a head and shoulders pattern on the 4 hour chart. The height of the pattern from the neckline to the top of the head suggests that a move lower to 1.0850 may be in the cards.
But not so fast. As we all know, a reversal pattern such as this is not confirmed until the neckline is broken. Which means this is a potential reversal pattern until the bears can manage a 4 hour close below neckline support, at which time the pattern will be confirmed.
Summary: Wait for a 4 hour close below neckline support and then watch for a retest of the level as new resistance. Key support comes in at 1.1035 with a measured objective of 1.0850. A move above 1.1390 would negate any selling opportunity.