EUR/USD Price Analysis: Quick progress above 1.22 needed to avoid H&S pattern

• EUR/USD trades near 1.2165 versus 1.2178 early today. 
• The pair needs a quick move above 1.22 to avoid a head-and-shoulders pattern. 

EUR/USD defended the ascending (bullish) 50-day Simple Moving Average (SMA) support and broke higher from a falling wedge pattern earlier this week, signaling an end of the pullback from recent highs near 1.2350. 

The recovery, however, looks to be losing steam in the 1.2180 neighborhood. A reversal lower from there would confirm the right shoulder of a head-and-shoulders (H&S) pattern on the 4-hour chart. 

Acceptance under the potential H&S neckline at 1.2050 would put the bears back into the driver's seat and open the doors for a 300 pip move lower (target as per the measured move). 

Alternatively, a quick move above the psychological level of 1.22 would validate the recent bounce from the 50-day SMA and weaken the case for the H&S pattern, possibly yielding a re-test of the monthly high of 1.2349. 

4-hour chart

Trend: Bullish above 1.22

Technical levels