The market has been pushing lower aggressively after breaking below the major DEMAND LEVELS around 1.2100 and 1.2000 where historical bottoms were previously established back in July 2012 and June 2010.
The EUR/USD pair has lost almost 800 pips since the beginning of 2015. Moreover, theoretical long-term bearish targets would be located near 0.9450, especially after the FULL bearish MONTHLY below 1.2000 (January’s monthly candlestick).
Bearish breakout below 1.2000 and 1.1900 (prominent psychological SUPPORT) allowed a quick bearish decline towards 1.1100 to take place few days later.
Conservative traders were suggested to wait for a bullish pullback looking for better prices to SELL the EUR/USD pair off (R1 at 1.1550 and R2 at 1.1700). However, the EUR/USD bulls are not showing enough bullish momentum.
Instead, a bearish Flag pattern is being established on the daily chart. DAILY fixation below the price level of 1.1260 (recent bottom) confirms this bearish pattern.
Conservative traders can wait for a low-risk SELL entry at retesting of the price zone 1.1570-1.1590.
The price zone of 1.1470-1.1490 is a recently established SUPPLY zone on the H4 chart (the upper limit of a newly-established consolidation zone).
Short-term SELL positions can be taken there. Stop loss should be placed slightly above the price level of 1.1530 (recent high).
On the other hand, risky traders can wait for DAILY closure below 1.1260 (recent DEMAND level). This will probably indicate a bearish visit towards the WEEKLY low around 1.1110.
The material has been provided by InstaForex Company – www.instaforex.com