Two weeks ago, the EUR/USD pair looked oversold before the bullish engulfing daily candlestick emerged off price level of 1.2500 one month ago.
The upper limit of the movement channel (1.2880-1.2900) was targeted. However, bearish pressure was applied earlier around 1.2800-1.2840.
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.
Since no fixation above 1.2760-1.2780 took place on a daily basis, the EUR/USD pair remained under bearish pressure.
Now we can see another possible continuation pattern. A continuation Head and Shoulders pattern to be watched on daily basis. Obvious daily closure below 1.2490 (the origin of the previous bullish swing expressed one month ago) can theoretically extend the bearish targets towards price level of 1.2200.
The market expressed quite strong bearish momentum that went further below the lower limit of the previous bullish channel.
As depicted on the chart, the EUR/USD pair has been respecting the limits of the current bearish channel so far.
As anticipated, Price levels around 1.2750 (upper limit of the channel) provided a valid SELL entry. Quick decline took place towards price level of 1.2460 (the origin of the most recent bullish movement).
The SELL entry offered around 1.2730-1.2760 is running in profits now. Stop Loss can be advanced to 1.2510 to secure more of the achieved profits.
Daily closure below 1.2480 offered another SELL signal for risky traders as suggested yesterday. Stop Loss to be set as daily closure again above the entry levels. Target levels located at 1.2440, 1.2370 (already reached) and 1.2290 (being approached).
Another SELL entry may be offered at retesting of the recently broken DEMAND zone at 1.2450-1.2500. Stop Loss can be set as daily closure above 1.2520.
The material has been provided by InstaForex Company – www.instaforex.com