EUR/USD is trading in the red and it seems poised to drop in the short term after the failure to make another higher high. The rate has printed a double top pattern on the H4 chart, the validation could bring a great trading opportunity.

The USDX's rebound sends EUR/USD lower, another higher high on the US Dollar Index will really suggest a strong correction on this pair.

EUR/USD has retested the 1.18 psychological level and now it could drop further towards the 1.1695 former low. The failure to make another higher high and to approach the WL2 has signaled an overbought situation.

The double top reversal pattern will be confirmed below the 1.1695 level, if EUR/USD makes another lower low. EUR/USD could drop and approach 1.1495 static support if the chart pattern will be confirmed.

• EUR/USD Trading Tips

Sell below the 1.1695 level, the first target is seen at the 1.1495 level, while the second one could be represented by 1.1348 level.

Buy a consolidation above the 1.18 level, or another higher high, a jump, and close above the 1.1909 level. This scenario will invalidate the double top and will signal a potential growth way above the 1.20 level.