The market was pushed lower after breaking below major demand levels around 1.2100 and 1.2000 where historical bottoms were previously hit back in July 2012 and June 2010.
EUR/USD bears have already pushed the price slightly below the monthly demand level at 1.0550 (established on January 1997). Bullish recovery was expressed shortly after.
April's monthly candlestick came as a bullish engulfing one. However, the next monthly candlesticks (May, June, and July) reflect recent bearish rejection being expressed around 1.1450.
In the long term, a projection target is still located at 0.9450 if a bearish breakdown of the monthly demand level at 1.0550 occurs soon.
A bullish corrective movement towards 1.1500 will be possible only if May's monthly high of 1.1465 gets breached (a low probability).
After such a long bearish rally, which started around the levels of 1.1300, bullish rejection took place at 1.0570 (monthly demand level).
Multiple ascending bottoms were established around the levels of 1.0470, 1.0550, and 1.0850. These levels corresponded to the daily uptrend depicted on the chart.
Further bullish pressure was observed until bearish rejection was applied around 1.1400 (long-term double-top reversal pattern).
A daily closure below the level of 1.1150 brought EUR/USD to the mark of 1.1000 again.
A bearish daily closure below 1.0950 enabled a quick bearish decline towards 1.0850 and 1.0750.
Evident bullish recovery was expressed last week after hitting the level of 1.0800. Bulls have been trying to bring a bullish corrective movement towards 1.1000 and 1.1100.
Previously, the level of 1.1100, where the backside of the broken uptrend was located, had been visited few times including last Friday. However, significant bearish rejection was expressed both times.
As long as the market keeps trading below their recent supply levels around 1.1000, the depicted Double-Top pattern remains valid. Projection target extends down to 1.0600.
Trading recommendations:
Conservative traders could have waited for a bullish pullback towards the recently established supply zone of 1.1100-1.1150 for a valid sell entry. S/L should be lowered to 1.1170.
Another sell entry with a higher risk would be offered at retesting of the newly-established supply level at 1.1000 if bullish pullback occurs soon.
T/P levels should be located at 1.0990, 1.0850, and 1.0700.
The material has been provided by InstaForex Company - www.instaforex.com