The market has been pushed lower aggressively after breaking below 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 1600 pips since the beginning of 2015. This week, the EUR/USD pair has already pushed slightly below monthly demand around 1.0550 (established on January 1997) where some bullish recovery is expected to exist.
The price action should be observed around the current monthly demand level looking for monthly closure below 1.0570 as theoretical long-term projection targets are seen near 0.9450.
Obvious bearish breakdown of the weekly demand level at 1.1100 enhanced the bearish side of the market exposing lower targets.
Full projection targets for the Flag pattern were successfully reached around 1.0800 and 1.0500.
As anticipated, after such a long bearish rally (which started off 1.1300) bullish rejection existed around 1.0570 (MONTHLY DEMAND level).
Since then, the EUR/USD pair has been uptrending towards 1.1140.
Daily persistence above the price zone of 1.0850-1.0860 (recent DEMAND zone) enhances the probability of a quick corrective movement towards 1.1100 where a long-term sell position can be offered.
On the other hand, daily closure below 1.0850 (this week’s key-level) invalidates the bullish correction, bringing the GBP/USD pair back towards 1.0650-1.0600 (WEEKLY LOW).
The material has been provided by InstaForex Company – www.instaforex.com