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.
On Wednesday, the EUR/USD pair showed bullish recovery around price level of 1.2860. Successive bullish daily candlesticks are being expressed around these price levels.
For three days now, the pair has established one more congestion zone around the lower limit of the depicted channel. High incidence of bullish reversal is present as long as the daily low around 1.2850 remains defended by the bulls.
On the other hand, a bearish engulfing daily candlestick for today signals severe weakness of the bulls. This would enhance the bearish trend towards 1.2750 and 1.2680 as initial target levels.
Recent bullish recovery is witnessed on the chart. A possible bullish Head and Shoulders pattern was established with projection target located at 1.3075. However, manifestations of bearish domination of the short-term market is manifest on the chart.
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 Today around 1.2920.
Bearish slide below 1.2850 invalidates the possibility of a bullish reversal. Thus, bearish decline towards 1.2750 and 1.2680 would be expected then ( A bearish Flag pattern ).
The material has been provided by InstaForex Company - www.instaforex.com
