Previously, the EUR/USD pair moved lower after breaking below the major demand levels around 1.2100 and 1.2000 where historical bottoms were previously established back in July 2012 and June 2010.
The EUR/USD bears pushed the price slightly below the monthly demand level of 1.0550 (established in January 1997). Bullish recovery was observed shortly after.
April's candlestick came as bullish engulfing one. However, next monthly candlesticks (August, September, October, and November) reflected strong bearish rejection, which existed around the level of 1.1450.
Hence, a long-term projected target is still seen at 0.9450 if a bearish breakout below the monthly demand level of 1.0555 occurs before the end of this month (December).
On August 24, the EUR/USD pair looked overbought as the market spiked above the level of 1.1500 (daily supply level).
Shortly after, the intraday supply zone of 1.1360-1.1400 provided significant bearish pressure. An intraday sell entry was suggested. All T/P levels are located at 1.1150 and 1.1050 were already reached.
A bearish breakout of the depicted uptrend was performed on October 23rd. This enhanced a long-term bearish scenario with targets at 1.0800 and 1.0600.
Three weeks ago, daily persistence below the level of 1.0700 (key level) ensured enough bearish momentum towards 1.0550 (prominent monthly low) where the current bullish pullback was initiated.
This week, the level of 1.1000 constitutes to act as the significant supply level to offer a valid sell entry. A Head and Shoulders reversal pattern is established around the depicted supply level.
S/L should be located above 1.1050. Initial T/P levels should be located at 1.0900 and 1.0810.
An obvious bearish closure below 1.0820 (the neckline of the depicted reversal pattern) is needed to allow a further bearish decline towards 1.0730 and 1.0550 again.
The material has been provided by InstaForex Company - www.instaforex.com