EURUSD Price Analysis: Bearish Rejection at Resistance Targets 1.1660
Muhammad Faraz 
EURUSD Price Analysis Bearish Rejection at Resistance Targets 1.1660
EURUSD’s price has rallied into a strong resistance zone but is showing clear signs of buyer exhaustion and rejection. This price action suggests a bearish bias is forming as the pair struggles to find acceptance above key levels. Our analysis projects a decline towards a primary target of 1.166. This prediction is based on a confluence of technical factors, including the strength of the overhead resistance zone, bearish price action following a test of this zone, and the level’s historical significance as both support and resistance.
Current Market Structure and Price Action
The current market structure is potentially shifting from a short-term uptrend to a bearish reversal. The price has formed a clear lower high on the larger timeframe and is now interacting with a multi-layered resistance barrier. Recent price action shows a struggle to maintain momentum, with the chart indicating a “Strong Resistance Zone” that has so far capped upward moves. The failure to break decisively above this zone, especially after a prior decline, signals that sellers are actively defending this area, making a bearish reversal the higher probability outcome.
Identification of the Key Resistance Zone
The most critical technical element is the Strong Resistance Zone between approximately 1.1660 and 1.1760. The strength of this zone is derived from:
- Historical Significance: This zone has acted as a pivotal area in the past. The level at 1.16604, in particular, has previously served as both support and resistance, confirming its technical importance. A failure to hold above it now would signal a resumption of the broader bearish trend.
- Technical Confluence: The zone encompasses key psychological levels and aligns with the recent swing high near 1.17640, creating a dense area of supply.
- Market Psychology: This area represents a point where sellers have previously stepped in, and buyers who entered during the recent rally may look to exit at breakeven, adding to the selling pressure.
This confluence makes it a high-probability level for a bearish reaction.
Technical Target and Rationale
Our analysis identifies the following price target:
- Primary Target (PT1): 1.1660
- Rationale: The 1.1660 level is the core of the identified resistance zone. A common market behavior is for a broken support level to turn into resistance, and vice-versa. As the price is being rejected from this zone, the initial target is a retest of its lower boundary. A break below this level would confirm a failure of the recent recovery and open the path for a more substantial decline towards lower supports.
Prediction: We forecast that the price will continue to face selling pressure from the current level (~1.1750) and move down towards our primary target at 1.1660. A decisive daily close below 1.1660 would be a strong bearish confirmation.
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 the 1.17640 swing high. This would indicate a clear break of the resistance zone and a failure of the sellers, likely leading to a continuation of the rally and a shift in market structure.
- Position Sizing: Any short positions taken should be sized so that a loss triggered at the invalidation level represents a small, pre-defined percentage of your total capital (typically 1-2%).
Fundamental Backdrop
The technical setup is framed by the current fundamental landscape:
- Central Bank Policy Divergence: The monetary policy outlook for the European Central Bank (ECB) versus the US Federal Reserve (Fed) is a key driver. A more hawkish stance from the Fed relative to the ECB strengthens the US Dollar and weighs on EURUSD.
- Economic Resilience: Relative economic performance and inflation data from the Eurozone and the US will continue to guide central bank policy expectations, directly impacting the pair.
- Risk Sentiment: Deteriorating global risk sentiment often benefits the US Dollar as a safe-haven asset, creating headwinds for EURUSD.
These factors contribute to the challenging environment for the Euro and support the technical bearish bias.
Conclusion
EURUSD is at a critical technical juncture, testing a formidable resistance zone. The weight of evidence suggests a bearish resolution, targeting a decline to 1.1660. Traders should monitor for continued rejection and a break below the immediate support levels. Risk must be managed diligently by respecting the key invalidation level above 1.17640. The price action at the 1.1660 target will be crucial for determining whether the bearish trend will accelerate.
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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