EURUSD Bearish Setup: Projecting a Decline Towards 1.1590
Muhammad Faraz 
EURUSD Bearish Setup Projecting a Decline Towards 1.1590
EURUSD’s price has rallied into a significant and historically proven resistance cluster between 1.1750 and 1.1800. This price action suggests a bearish reversal is highly probable. Our analysis projects a decline towards a primary target of 1.16800, with a more ambitious secondary target at 1.15900. This prediction is based on a confluence of technical factors, including a strong multi-touch resistance zone and bearish price action rejection signals.
Current Market Structure and Price Action
The broader market structure for EURUSD has been attempting a recovery from its September lows. However, this move higher is now confronting a major supply zone. The price is currently interacting with a strong resistance zone between 1.1750 and 1.1800. Recent price action shows clear signs of hesitation and seller aggression near this zone, as evidenced by small-bodied candles and potential bearish rejection patterns (like pin bars or bearish engulfing candles on lower timeframes), indicating that a breakdown may be imminent.
Identification of the Key Resistance Zone
The most critical technical element is the Strong Resistance Zone around 1.1750 – 1.1800. The strength of this zone is derived from:
- Historical Significance: This level has acted as a major swing low and consolidation area throughout August and September 2023. Price previously broke down from this area, and it is now being re-tested as new resistance—a classic technical analysis principle.
- Technical Confluence: The zone contains multiple precise levels (1.17500, 1.17525, 1.18000) where previous price action occurred, creating a band of resistance rather than a single, thin line.
- Market Psychology: This area represents a point where sellers who missed the initial breakdown are likely to re-enter short positions, and buyers who bought the dip are likely to take profits, creating a surplus of supply.
This powerful confluence makes it a high-probability level for a bearish reaction.
Technical Target(s) and Rationale
Our analysis identifies the following bearish price targets:
Primary Target (PT1): 1.16800
Rationale: This level represents the immediate and most logical target. It is a previous minor swing low and a psychological level. A break below the recent consolidation would likely see price move swiftly to test this area.
Secondary Target (PT2): 1.15900
Rationale: This is a more significant target, acting as the major swing low from early October. It is a stronger historical support level, and a move to this level would represent a full retracement of the recent corrective rally.
Prediction: We forecast that the price will be rejected from the current resistance zone and break below nearby support, initiating a move towards PT1 at 1.16800. A sustained break below that level would then open the path towards the ultimate target at PT2, 1.15900.
Risk Management Considerations
A professional strategy is defined by its risk management.
- Invalidation Level (Stop-Loss): The entire bearish thesis is invalidated if the price achieves a sustained daily close above 1.18200. This level is chosen above the entire resistance cluster (1.1800) to account for any false breakout spikes. A close above this level would indicate a failure of the bearish rejection and likely trigger a move higher towards the next resistance.
- Position Sizing: Any short positions taken near the resistance zone should be sized so that a loss triggered at the 1.18200 invalidation level represents a small, pre-defined percentage of your total capital (e.g., 1-2%).
Fundamental Backdrop
The technical setup is framed by the current fundamental landscape:
- ECB vs. Fed Policy: The primary driver remains the divergence in monetary policy expectations between the hawkish US Federal Reserve and the more cautious European Central Bank, which strengthens the US Dollar.
- Risk Sentiment: Deteriorating global risk sentiment, often fueled by geopolitical tensions, tends to benefit the safe-haven US Dollar at the expense of the Euro.
- Economic Data: Upcoming US GDP, PCE inflation data, and ECB policy announcements will be critical for either confirming or negating this technical outlook.
These factors currently contribute to a bearish medium-term sentiment for the EURUSD pair.
Conclusion
EURUSD is at a critical technical inflection point, testing a formidable resistance zone. The weight of technical evidence suggests a bearish resolution, targeting a decline first to 1.16800 and potentially extending to 1.15900. Traders should monitor for confirmed bearish reversal signals on the lower timeframes (H4/H1) and manage risk diligently by respecting the key invalidation level at 1.18200.
Chart Source: TradingView
Disclaimer: This analysis is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. All trading and investing involves significant risk, including the possible loss of your entire investment. Always conduct your own research (DYOR) and consider seeking advice from an independent financial professional before making any trading decisions.
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