The price zone of 1.3800-1.3880 (dotted on the chart) provided considerable SUPPLY for the EUR/USD pair. This price zone managed to pause the bullish momentum leading to obvious breakdown of the depicted bullish trend line.
Bearish pressure which originated off 1.3650 has applied enough pressure at the price level of 1.3560 (corresponding to the previous prominent bottom). Since then, the pair has been downtrending within the depicted bearish channel.
Again, the EUR/USD pair shot towards 1.3330 (prominent bottom established on November 8, 2013) once more after the initial testing that took place on August 6 when significant bullish pressure was applied. Bearish breakout of the consolidation range took place on Tuesday.
On Friday, the pair achieved WEEKLY closure at 1.3240, then the pair opened this week on a bearish gap (around price level of 1.3200). Further price action should be considered knowing that the pair is currently testing the lower limit of the channel. High probability of reversal exists.
Bearish breakdown of the price level of 1.3430 allowed the pair to establish a consolidation zone down to 1.3330. Since then, the EUR/USD pair has been trapped inside this price range.
The short-term bearish trend remains intact as long as the bears keep defending the price zone of 1.3420-1.3450.
In case the bears keep applying significant bearish pressure, the EUR/USD pair has Intraday DEMAND zone located between 1.3200 - 1.3150 respectively (Fibonacci Expansion Levels).
The pair has been trading below these levels since Monday. However, daily closure should be considered to determine if the current breakdown will persist or not.
On the other hand, bullish fixation above 1.3285 is essential to acquire a momentum strong enough to initiate a bullish corrective move towards 1.3340 and 1.3410 as well.
The material has been provided by InstaForex Company - www.instaforex.com
