The price zone of 1.2880-1.2900 ( corresponding to the upper limit of the previous broken channel ) was being targeted one month ago. 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. 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 already on previous Friday ).
Price level of 1.2200 corresponds to the projection target of the current bearish flag pattern as long as the bears keep defending the current price zone of 1.2470-1.2490 as their recent SUPPLY zone.
Few ascending bottoms around 1.2400 and 1.2430 ( within the borken depicted bullish channel ) were established. This applied temporary bullish pressure that’s why, the EUR/USD pair managed to fixate above price level of 1.2500 for a few 4H candlesticks before the bears managed to apply enough bearish pressure on Friday.
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 ).
On the other hand, the EUR/USD pair has a bearish projection target ( the Flag pattern ) roughly located around price levels of 1.2200.
Price zone of 1.2470-1.2490 should now be considered for SELLING the pair at considerable prices. 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.
Stop Loss should be located above 1.2575. Target levels should be set at 1.2430 and 1.2370 respectively.
The material has been provided by InstaForex Company – www.instaforex.com