Last week, the EUR/USD pair looked oversold before the bullish momentum could get it back inside the channel.
The origin of the bullish engulfing pattern (around 1.2600) once provided a good BUY position as suggested in previous articles.
The upper limit of the movement channel (1.2880-1.2900) was being targeted this week. However, bearish pressure was applied earlier around 1.2800-1.2840.
This allowed a bearish breakout off the current bullish channel to take place. This probably confirms a Flag continuation pattern. Initial daily target level would be located around 1.2490.
A valid BUY position was previously suggested around the neckline of the bullish Head and Shoulders pattern (price level of 1.2660).
On Wednesday, the market expressed quite strong bearish momentum that pushed below the lower limit of the channel.
Bears have successfully pushed towards price zone of 1.2600-1.2620 ( projection target of the double-top pattern ). As anticipated, around this price zone, bullish recovery was expressed.
Recommendation:
A valid SELL entry may be anticipated around 1.2730 at retesting which should be happening soon. Stop Loss should be set at 1.2780.
Price level of 1.2730 corresponds to the backside of the broken channel as well as the upper limit of the newly established channel depicted on the chart.
The material has been provided by InstaForex Company - www.instaforex.com
