Several congestion zones were established at meeting the downtrend line around price levels of 1.3800, 1.3580 and 1.3335 before further bearish decline took place.
The recent bearish slide below 1.2870 invalidated the previous attempt of bullish reversal. Thus, bearish decline towards 1.2680 and 1.2570 took place shortly after achieving the projection targets of the recent flag pattern.
Careful monitoring of price action around the current price levels is essential to determine the next destination of the EUR/USD pair.
The EUR/USD pair looked oversold and was trading beyond the lower limit of the channel.
This week, some bullish recovery was expressed off 1.2500 to push towards 1.2650 ( back inside the breached channel ). Thus, a bullish engulfing pattern is depicted on the chart.
The current short-term bearish trend remains intact as long as the bears keep defending the price zone around 1.2870 (the recent consolidation zone).
The bearish slide below 1.2820 invalidated the possibility of a short-term bullish reversal.
A short-term bullish head and shoulders pattern is being established on the 4H chart. 4H closure above 1.2700 is essential to confirm the reversal.
Careful watching of price action around the current price levels is essential to determine the next destination of the EUR/USD pair.
Recommendation :
A conservative trader should wait for daily closure again inside the channel to look for long positions.
In case the bulls initiate a corrective movement around the lower limit of the channel being breached today, the first target levels to be visited should be located around 1.2870 and 1.2940 where the upper limit of the channel and significant Fibonacci level are located.
The material has been provided by InstaForex Company - www.instaforex.com
