EURUSD is trading 1.2011, lower than the lows made two days ago. As we explained in our last analysis, the bounce in EURUSD is expected to be short lived and price to resume its downtrend. Making new short-term lows is a confirmation of our scenario for a pull back at least towards 1.1975. However traders should not ignore the potential that we are now forming a right hand shoulder in a head and shoulders pattern.

Yellow lines - Potential Head and shoulders pattern

Blue line - neck line support

Horizontal blue lines -Fibonacci retracements

EURUSD got rejected at the red resistance trend line and is pulling back. The deeper the pull back the higher the chances of seeing this pattern get activated. The bearish head and shoulders pattern gets activated only if price breaks below the neckline support around 1.17. Price is closer to key resistance than key support. We warned in previous posts that EURUSD justified at least a pull back. Possible pull back targets are at 1.1975 and 1.1870. A break below the second target will increase chances of price testing the neckline support currently at 1.1680.