The recent bearish slide below 1.2870 invalidated the previous attempt of bullish reversal. Thus, bearish decline towards 1.2680 and 1.2510 took place shortly after.
Last week, the EUR/USD pair looked oversold and was trading beyond the lower limit of the channel before bullish momentum could get it back inside the channel.
That's why, price action around 1.2580-1.2600 (the lower limit of the channel) was important to determine the next destination.
Bullish recovery was expressed off 1.2500 and 1.2600 to push towards 1.2700 and 1.2830 (back inside the channel).
The origin of the bullish engulfing pattern (around 1.2600) provided a good BUY position as suggested in previous articles. It's running in profits now.
The upper limit of the movement channel (1.2880-1.2900) is being approached. Bearish pressure is anticipated to be applied.
The medium-term bearish trend remains intact as long as the bears keep defending the price zone around 1.2880-1.2900 (the recent consolidation zone).
A short-term bullish Head and Shoulders pattern was established on the 4H chart as anticipated. 4H fixation above 1.2700 confirmed the reversal and allowed the bulls to reach 1.2850.
A valid BUY position was suggested around the origin of the bullish Head and Shoulders pattern (price level of 1.2660). The final target is being approached today around 1.2900.
Recommendation :
Price action should be watched around 1.2870-1.2900 (upper limit of the channel and previous broken demand level) for one more SELL position.
Stop loss for this short position should be located above 1.2965.
On the other hand, price level of 1.2700 should be watched for price action if visited first. It may provide another intraday long position.
The material has been provided by InstaForex Company - www.instaforex.com
