Previously around 61.8% – 50% Fibonacci levels ( Price zone between 1.6240 and 1.6350 ), a short position was offered and it got triggered few days later. The market successfully pushed below 1.6100 shortly after.
Prominent bullish DEMAND existed around price zone of 1.5940 – 1.5880. Bullish engulfing daily candlesticks emerging off these levels paused the bearish momentum for a few days.
Then, price zone of 1.6100-1.6140 constituted a prominent SUPPLY zone. The pair has moved sideways until recent bearish breakout took place.
Daily fixation below 1.5870 has put further bearish pressure on the pair to reach 1.5780, 1.5700 and 1.5650 where the back side of the mentioned bearish channel is located.
The previous daily candlesticks represent intraday DEMAND being offered around 1.5650 after such a strong bearish momentum. Sideway movement has been taking place for a whole week now.
4H chart reveals long period of downside movement roughly maintained within the limits of the depicted channel.
Last week, the bears managed to break below the recent low around 1.5790. This exposed the potential target at 1.5700 and 1.5650 where the backside of the broken channel is roughly located.
Conservative traders should wait for a bullish pull-back towards 1.5820-1.5860 for a valid SELL entry with Stop Loss located just above 1.5900.
Price level of 1.5730 corresponds not only to successive tops established last week but also the upper limit of the current bearish channel. Intraday SUPPLY should be anticipated at retesting.
Bullish breakout above which exposes price levels of 1.5800 – 1.5820 initially.
On the other hand, risky traders could have taken a BUY position around 1.5600-1.5650. Stop loss should be set at 1.5620 to offside the risk of such a counter-trend position.
The material has been provided by InstaForex Company – www.instaforex.com