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, the 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 previous bullish swing to take place towards 1.1390.
In February, 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. If not, further bullish movement towards 1.1700 should be expected.
On the other hand, the level of 0.9450 will remain a long-term bearish target in case the monthly candlestick comes to close below the depicted monthly demand level of 1.0570.
In November 2015, daily persistence below the level of 1.0800 (the prominent key level) ensured enough bearish momentum towards 1.0550 (the 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.
Consequently, a quick bullish movement started 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 consolidation range) was seen on the daily chart. A quick bearish decline was expected towards 1.0820 where the most recent bullish swing was initiated.
Recently, bullish fixation above 1.1000 has been mandatory to allow bullish movement to continue. Bullish targets were projected towards 1.1320 and 1.1400.
Similar to what happened on February 12, the supply zone of 1.1320-1.1400 stood as a significant resistance zone for the EUR/USD pair which offered bearish rejection and a valid sell entry on April 12.
Moreover, a Head and Shoulders reversal pattern is being expressed around this supply zone. Hence, another valid entry can be offered at retesting of the price level of 1.1320 (the right shoulder of the reversal pattern).
Daily persistence below the depicted uptrend line (the level of 1.1320) is needed to ensure more bearish momentum in the market.
Trading Recommendation:
In previous articles, a valid sell entry was suggested around the supply zone of 1.1400. It's already running in profits. T/P levels should be placed at 1.1200 and 1.1070. S/L should be lowered to 1.1360 to secure some profits.
Conservative traders should consider the current daily closure below 1.1300 (a prominent demand level and the uptrend line) as a valid SELL signal. Initial T/P levels should be located at 1.1150 and 1.1080.
The material has been provided by InstaForex Company - www.instaforex.com