EUR/USD technical analysis: Risks skewed to the downside after failed breakout

• EUR/USD's 4-hour chart shows a failed breakout – a bearish sign. 
• Thursday's candle also indicates the path of least resistance is to the downside. 

EUR/USD will likely face selling pressure, having failed to capitalize on a bullish breakout on Thursday.

The common currency exited the falling channel with a bullish move to 1.1163 about 12 hours ago. The channel breakout on the 4-hour chart, however, failed to draw bids, allowing the EUR/USD pair to fall back to 1.11.

Failed breakouts are powerful bearish reversal signals, according to technical analysis theory. The relative strength index (RSI) on the 4-hour chart is also reporting bearish conditions with a below-50 print.

Further, Thursday's bearish outside bar reversal candle indicates the path of least resistance is to the downside.

The pair, therefore, risks falling 1.1070 – the support of the ascending trendline on the 4-hour chart. The bearish case would be invalidated if the spot rises above 1.1163. As of writing, the pair is trading in a sideways manner near 1.11 support.

4-hour chart

Trend: Bullish

Technical levels