EUR/USD technical analysis: Bid near 1.12, stuck in a pennant pattern

• EUR/USD has charted a narrowing price range or a pennant pattern over the last four trading days.
• A pennant breakout would imply a continuation of the rally from recent lows near 1.1027.

EUR/USD is mildly bid around 1.12 at press time, but the outlook remains neutral with the pair still trapped in a pennant pattern.

Pennants are considered as continuation setups, meaning they end up accelerating the preceding move.

EUR/USD has charted a pennant pattern after having rallied from 1.1027 to 1.1250.

So, a pennant breakout on the 4-hour chart, if confirmed, will signal a resumption of 1.1027 and could yield 1.14. On the way higher, the pair may encounter resistance at 1.1286 (July 11 high).

On the other hand, a pennant breakdown would imply an end of the bounce from recent lows near 1.1027.

4-hour chart

Trend: Neutral