EUR/USD technical analysis: Looks highs indicate the path of least resistance is to the downside

• EUR/USD is on the defensive, having charted a bearish lower high above 1.12.
• The pair risks falling back to the Aug. 1 low of 1.1027.

EUR/USD is looking south, having carved out a bearish lower high near 1.1250 over the last few days.

The currency pair picked up a bid at 1.1027 on Aug. 1 and jumped to 1.12 on Aug. 5. In the six trading days to Aug. 13, the pair repeatedly faced rejection above 1.1230 and ended up charting a small knot of congestion that looked like a bull flag pattern, a continuation pattern.

A breakout would have opened the doors for levels above 1.14 (flag breakout target as per the measured move method).

The pair, however, fell to 1.1131 on Wednesday, confirming a downside break of the flag.

Essentially, the bounce from the Aug. 1 low of 1.1027 has ended up charting a bearish lower high. Put simply, the recovery rally has ended and the bears seem to have regained control. So, a fall back to 1.1027 could be in the offing.

As of writing, the pair is trading at 1.1144, having hit a low of 1.1133 earlier today. The outlook would turn bullish if and when the pair prints a daily close above 1.1250, invalidating the bearish lower highs pattern.

Daily chart

Trend: Bearish

Pivot points