In January 2015, the EUR/USD pair moved below the major demand levels near 1.2100 and 1.2000 where historical bottoms had been previously set in July 2012 and June 2010. Hence, a long-term bearish target is projected towards 0.9450.
In March 2015, EUR/USD bears challenged the monthly demand level of 1.0570, which had been previously reached in August 1997.
Later in April 2015, a strong bullish recovery was observed around the mentioned demand level.
April's monthly candlestick came as a bullish engulfing one. However, the next monthly candlesticks (September, October, and November) reflected a strong bearish rejection in the area around 1.1400.
December's candlestick came as a bullish engulfing one, allowing the current bullish pullback to take place towards 1.1370.
Previously, the price zone of 1.1350-1.1400 acted as a significant supply zone during the previous bullish pullback. Hence, another bearish rejection should be expected around the current price zone during the current bullish swing.
On the other hand, the level of 0.9450 will remain a long-term bearish target in case the current monthly candlestick closes below the depicted monthly demand level of 1.0570.
In November 2015, daily persistence below the level of 1.0800 (prominent key level) ensured enough bearish momentum towards 1.0550 (monthly demand level) where the most recent bullish swing was initiated.
During the last few weeks, a consolidation range between 1.1000 and 1.0800 was established on the daily chart. On February 3, a bullish breakout was executed above this consolidation range.
That is why a quick bullish movement took place towards the zone of 1.1350-1.1400 where previous daily bottoms and the backside of the broken uptrend were depicted on the daily chart.
On February 12, a strong bearish engulfing daily candlestick was expressed near the mentioned supply zone. Hence, a quick bearish decline towards 1.1000 was executed.
A temporary bearish breakdown below 1.1000 (upper limit of the broken range) was seen on the daily chart. A quick bearish decline was expected towards 1.0820 where the most recent bullish swing was initiated.
Last week, a bullish fixation above 1.1000 was mandatory to allow further bullish movement to take place. More bullish targets were expected around 1.1320 and 1.1400 (currently being visited).
Similar to what happened on February 12, the supply zone of 1.1350-1.1400 remains a significant resistance zone for the EUR/USD pair to offer bearish rejection and a valid sell entry.
Trading Recommendation:
A valid SELL entry can be offered around the current supply zone of 1.1350-1.1400. S/L should be placed above 1.1460.
T/P levels should be placed at 1.1200 and 1.1070.
The material has been provided by InstaForex Company - www.instaforex.com