The EUR/USD pair started the trading week with a break below 1.21. the area provided important support recently, leading many to believe that a descending triangle forms. Judging by the price action, we may say that the pressure against the horizontal support does support the bearish pattern, and a close below 1.21 should send the pair even lower.
Europe struggles with the pandemic as various European economies are in lockdown mode. The recent delay in vaccine deliveries means that the lockdowns are likely to be extended. As such, the economic impact will be much bigger than initially expected. Nevertheless, the PMI manufacturing data today was not so bad. It came out at 54.8, as expected, an encouraging release considering the lockdowns.
EUR/USD Technical Analysis
A descending triangle formation shows the price building energy to break below a horizontal line. By doing so, it suggests further decline possible as the measured move points to 1.19 and beyond.
What is even more concerning for bulls is the fact that the triangle forms as the right shoulder of a head and shoulders pattern visible on the bigger timeframes. A break of the triangle means a break of the neckline of the head and shoulders as well, pointing to 1.15 or even more. Bears may want to stay short with a stop at 1.2180 and target a move below 1.19.
EUR/USD Price Forecast