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 thus, initiating the current downtrend.
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 until the price level of 1.3330 where a narrow range congestion zone was established.
Shortly after, bearish breakout was expressed. Quick decline occurred towards the price levels around 1.3150 then 1.3000 following a bearish gap.
Further price action should be considered knowing that the pair is currently testing the lower limit of the channel around 1.2920-1.2860.
High probability of reversal exists despite the manifest bearish momentum provided that the recent daily low around 1.2860 remains defended by the bulls.
The short-term bearish trend remains intact as long as the bears keep defending the price zone of 1.3310-1.3400.
Daily closure should be considered to determine if the lower limit of the channel will provide support for the bulls or not.
Bullish fixation above 1.3150 and 1.3200 ( recent tops ) is essential to acquire a momentum strong enough to initiate a bullish corrective move towards 1.3295 and 1.3330 as well.
On the other hand, bearish pressure is currently targeting at 1.2860 ( lower limit of the depicted channel ).
Four-hour fixation above price level of 1.2950 ensures higher probability of bullish reversal.
The material has been provided by InstaForex Company - www.instaforex.com
