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EUR/USD Forming an Inverted Head and Shoulders

EUR/USD is trying to form an in inverted head and shoulders pattern as seen in the 4H chart. The 1.25 low is the head, while the lows around 1.26 are the shoulders. The neckline is the 1.2675-1.27 area. 

For now, the 4H picture is still bearish for EUR/USD based on the moving averages and the 4H RSI, which is still below 60 and reflects maintenance of the bearish momentum. 

A break above 1.27 with the 4H RSI pushing above 60 would be a sign of a bullish correction scenario. Then if price can hold above 1.26, we can say there is respect for the price bottom, and a bullish correction would be very probable.


(click to enlarge)

The 1.29 level could be a target for the bullish correction. It is
1) A psychological level.
2) A support/resistance pivot area.
3) 1.29 is 200 pips from 1.27. The current price bottom is 1.25-1.27, 200 pips. 1.29 is thus the pattern breakout projection.
4) The 200-period SMA in the 4H chart.

A break below 1.26 however puts pressure back on the 1.25 low. Below that, the near-term support to look for will be the 1.2460 area, which is the 78.6% retracement of the 2012-2014 rally (1.2042-1.3993)