A bullish breakout above the previous consolidation zone between 1.2400 and 1.2800 was performed on July 15 (shown on the weekly chart).
A significant bearish rejection was observed around 1.3450. Hence, another consolidation range was established from 1.3450 down to 1.2800.
On December 7, a bullish breakout above 1.3450 (the upper limit of the recent consolidation range) enhanced the bullish side of the market. Hence, a bullish visit to the resistance level of 1.4120 (Fibonacci Expansion 100%) was executed.
Bullish persistence above 1.4150 enhanced the bullish side of the market towards 1.4650 (141.4% Fibonacci expansion) where an evident bearish rejection was expected (bearish engulfing weekly candlestick).
The level of 1.4120 (Fibonacci Expansion 100%) remains a significant key level to be watched for further price reactions.
On the other hand, the current price zone of 1.3250-1.3180 stands as a significant support zone to be watched for a valid buy entry.
The price zone of 1.3250-1.3180 corresponds to a daily uptrend line and the upper limit of the previous consolidation range (prominent breakout level). Hence, signs of a bullish rejection around it should be considered a valid buy signal.
Trading Recommendations:
Conservative traders should be looking for a valid bullish entry around the current price zone of 1.3250-1.3180.
S/L should be located below 1.3100. Initial T/P levels should be located at 1.3400, 1.3500, and 1.3640.
The material has been provided by InstaForex Company - www.instaforex.com