The price zone of 1.2880-1.2900 (corresponding to the upper limit of the previous broken channel) was being targeted a month ago. However, bearish pressure was applied earlier around 1.2800-1.2840 where the depicted head and shoulders reversal pattern was established.
A bearish breakout off the bullish channel took place shortly after, thus confirming a Flag continuation pattern. Bearish projection target was already reached around 1.2490.
Daily fixation below 1.2490-1.2500 (the origin of the previous bullish swing expressed one month ago) theoretically extends the bearish targets towards the price level of 1.2200.
As we mentioned, the EUR/USD bears needed to obviously fixate below 1.2490 soon enough (took place two weeks ago).
As anticipated during the past two weeks, the bears have been defending the price zone of 1.2470-1.2490 and recently price level of 1.2365 as their recent SUPPLY levels.
Price level of 1.2200 corresponds to the projection target of the current bearish flag pattern as long as 1.2490 remains unbroken.
The bearish flag scenario should now be considered for the longer-term positions. Bears should be looking for a solid SUPPLY ZONE to SHORT the EUR/USD pair around (review Trade recommendations below).
A double-top pattern is now manifested on the 4H chart. As anticipated, fixation below neckline ( price level of 1.2430 ) enhanced the bearish tendency of the market.
On the other hand, the EUR/USD pair has a bearish projection target (the Flag pattern) roughly located around price levels of 1.2200.
Fixation below recent SUPPLY levels around 1.2365 and 1.2430 is mandatory to maintain the current bearish momentum towards 1.2200.
Trade recommendations:
Price zone of 1.2470-1.2490 was considered for SELLING the pair. This price zone corresponds to a previous swing low ( established on October 6) as well as significant Fibonacci level of the most recent bearish impulse.
The Stop Loss should be lowered to be slightly above 1.2450. Target levels should be set at 1.2430, 1.2360 initially and price zone of 1.2250-1.2200 to be watched next.
Intraday traders can SHORT the pair around 1.2365 at retesting. SL should be set as four-hour closure above 1.2400.
The material has been provided by InstaForex Company - www.instaforex.com
