A bullish engulfing daily candlestick emerged off price level of 1.2500 one month ago. A resulting bullish movement towards 1.2850 was contained within the depicted channel.
Price zone of 1.2880-1.2900 ( corresponding to the upper limit of the movement channel ) was targeted. However, bearish pressure was applied earlier around 1.2800-1.2840 where the depicted head and shoulders reversal pattern was initiated.
A bearish breakout off the bullish channel took place shortly after, thus confirming a Flag continuation pattern. Initial daily target level was located around 1.2490.
Daily fixation below 1.2490-1.2500 (the origin of the previous bullish swing expressed one month ago) theoretically extends the bearish targets towards price level of 1.2200 (projection target of the bearish flag pattern). However, signs of indecision and hesitance is manifested on the daily chart.
The pair has been moving within narrow range of consolidation. Friday's candlestick ended up with daily closure above 1.2500.
However, yesterday we saw a Shooting-Star daily candlestick that can resume the ongoing bearish momentum if the daily closure ended below price level of 1.2500.
As depicted on the chart, the EUR/USD pair has been respecting the limits of the current bearish channel so far.
As anticipated, price levels around 1.2750 (upper limit of the channel) provided a valid SELL entry. Quick decline took place towards price level of 1.2450.
Last week, the EUR/USD pair has tested price level of 1.2500 few times, the bears have failed to apply enough bearish momentum.
Instead, few more ascending bottoms around 1.2400 and 1.2430 were established. This applied bullish pressure on SUPPLY zone located around 1.2500 where the upper limit of the channel is located.
A high probability of bullish reversal exists as long as the bulls keep fixating above 1.2500. Thus, establishing another ascending bottom confirming the ongoing uptrend.
Trade recommendations:
Based on the technical data mentioned above, bullish breakout is now a high-probability scenario.
4H closure above 1.2470 then 1.2500 gives an early confirmation. Projection target would be located around 1.2600.
The material has been provided by InstaForex Company - www.instaforex.com
