The price zone of 1.2880-1.2900 ( corresponding to the upper limit of the previous broken channel ) was targeted. However, bearish pressure was applied earlier around 1.2800-1.2840 where the depicted head and shoulders reversal pattern was initiated.
A bearish breakout off the bullish channel took place shortly after, thus confirming a Flag continuation pattern. Initial daily target level was located 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 price level of 1.2200 (projection target of the bearish flag pattern). However, signs of indecision and hesitance is manifested on the daily chart.
The pair has been moving within narrow range of consolidation. Friday’s candlestick ended up with daily closure above 1.2500.
The EUR/USD pair is expressing another bearish Flag continuation pattern on the daily chart provided that daily fixation below 1.2490 obviously occurs and soon enough ( within this week ).
As depicted on the chart, the EUR/USD pair has been respecting the limits of the current bearish channel until November 14.
Last week, the EUR/USD pair tested price level of 1.2500 few times as the bears have failed to apply enough bearish momentum.
Instead, few more ascending bottoms around 1.2400 and 1.2430 were established. This applied bullish pressure on SUPPLY zone located around 1.2500 where the upper limit of the channel is located.
A high probability of bullish reversal exists as long as the bulls keep fixating above 1.2500. Thus, establishing another ascending bottom confirming the ongoing uptrend.
Based on the technical data mentioned above, bullish breakout is now a high-probability scenario.
4H closure above 1.2470 then 1.2500 gives an early confirmation. Projection target would be located around 1.2620.
The bearish flag scenario should also be considered for the longer-term positions.
The material has been provided by InstaForex Company – www.instaforex.com