In January 2015, the EUR/USD pair moved below the major demand levels near 1.2100 where historical bottoms were previously set in July 2012 and June 2010. Hence, a long-term bearish target was projected towards 0.9450.
In March 2015, the EUR/USD bears challenged the next monthly demand level around 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. However, next monthly candlesticks (September, October, and November) reflected a strong bearish rejection around the area of 1.1400-1.1500.
In February 2016, the depicted price levels around 1.1400-1.1500 acted as a significant supply zone during the current bullish pullback.
That's why, another bearish rejection was expected around the current price levels (Note the previous monthly candlestick of May).
In the long-term prospect, the level of 0.9450 will remain a projected bearish target if the current monthly candlestick comes to close below the depicted monthly demand level of 1.0570.
On the other hand, note that a monthly candlestick closure above 1.1400 invalidates this bearish outlook on the intermediate-term.
In December 2015, 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. Bullish fixation above 1.1000 was mandatory to allow bullish movement to continue.
Similar to what happened in October 2015, the supply zone of 1.1410-1.1550 constituted a significant resistance zone for the EUR/USD pair.
On May 5, the 1.1600 level corresponded to the backside of the broken uptrend line depicted on the chart where the shooting-star daily candlestick appeared, indicating significant bearish rejection.
Daily persistence below the levels of 1.1400 and 1.1200 was needed to ensure enough bearish momentum towards the 1.1100 and 1000 levels. However, lack of enough bearish pressure was manifested by the end of last week's consolidations.
The recent bullish closure above 1.1200, enhanced further bullish advancement towards 1.1420 where evident signs of bearish rejection and a valid SELL entry were expected. S/L should be lowered to 1.1350 to secure some profits.
Currently, bearish persistence below 1.1220 (recent key-level) is needed to maintain enough bearish momentum in the market. Otherwise, the EUR/USD pair may remain trapped between the levels of 1.1200 and 1.1400.
Note that any bearish pullback towards the level of 1.1000 (the depicted uptrend line and a previous consolidation range) should be considered for a valid BUY entry. S/L should be placed below 1.0950.
The material has been provided by InstaForex Company - www.instaforex.com