The price zone of 1.3800-1.3880 (dotted on the chart) managed to pause the previous bullish momentum, thus initiating the current downtrend within the depicted bearish channel.
Several congestion zones were established around the price levels of 1.3515 and 1.3335 before further bearish decline could take place.
Last week on Wednesday, the EUR/USD pair showed bullish recovery around price level of 1.2860. Successive bullish daily candlesticks were expressed around these price levels.
However, the bearish engulfing daily candlestick for Friday indicated severe weakness of the bulls. This enhanced the bearish trend towards 1.2750 and 1.2680 as initial target levels.
Today's daily candlestick should be monitored for bullish rejection. The EUR/USD pair is currently testing the lower limit of the ongoing bearish channel. That's why, any signs of bullish reversal should indicate upcoming corrective movement towards 1.3060.
The current short-term bearish trend remains intact as long as bears keep defending the price zone around 1.2995 (the recent weekly high). Moreover, another descending high was established on Wednesday around 1.2920.
Bearish slide below 1.2820 invalidated the possibility of a bullish reversal. Thus, bearish decline towards 1.2750 and 1.2680 took place shortly after achieving the projection targets of the bearish flag pattern.
Careful watching of price action around the current price levels is essential to determine the next destination of the EUR/USD pair.
In case the bulls initiate a corrective movement around the lower limit of the channel being tested today, the first target levels to be visited should be located around 1.2940 and 1.3060.
The material has been provided by InstaForex Company - www.instaforex.com
