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.
Again In February 2016, the depicted price levels around 1.1400-1.1500 acted as a significant supply zone during the bullish pullback.
That is why, recent bearish rejection was expected around the current price levels (note the monthly candlesticks of May, June and August).
In the long term, 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 an intermediate-term basis (low probability).
The long-term outlook for the EUR/USD pair remains bearish as the monthly chart illustrates. Bearish fixation below 1.1000 is needed to enhance this bearish scenario.
On July 27, the EUR/USD pushed above the price zone of 1.1000-1.0950 (previous consolidation range). Hence, further bullish advance towards 1.1250 was executed as expected.
Temporary bullish breakout was expressed above the price zone of 1.1250 (supply level 1). However, significant bearish rejection was expressed on August 26.
Recently on September 6, evident bullish recovery and another bullish breakout above 1.1250 were expressed .
The price level of 1.1400 constitutes another supply level to be watched for a valid SELL entry if the current bullish breakout persists above 1.1250 (low probability). S/L should be set as daily closure above 1.1450.
On the other hand, re-closure below 1.1250 (supply level 1) is needed to maintain enough bearish pressure to enhance the bearish side in the market. Initial bearish targets to be located at 1.1050 and 1.0990.
The material has been provided by InstaForex Company - www.instaforex.com