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.
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 pressure, 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 1.0570 occurs before the end of this month (January).
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 23. This enhanced a long-term bearish scenario with targets at 1.0800 and 1.0600.
One month ago, daily persistence below the level of 1.0800 and 1.0700 (key levels) ensured enough bearish momentum towards 1.0550 (prominent monthly level) where the recent bullish pullback was initiated.
Last week, the level of 1.1000 was considered a significant supply level to offer a valid sell entry, and it already did.
A Head and Shoulders reversal pattern was established around the mentioned supply level.
A bearish closure below 1.0800 (neckline) confirmed the depicted reversal pattern. Hence, the S/L for our sell entry should be lowered to 1.0850 to secure some profits.
Bearish persistence below 1.0800 (neckline of the depicted reversal pattern) allows a further bearish decline towards 1.0730 and 1.0550 again.
On the other hand, the price level of 1.0800 (reversal pattern's neckline) will probably offer another valid SELL entry if bullish pullback occurs today.
The material has been provided by InstaForex Company - www.instaforex.com