On March 24, by breaking down 1.5175, the Double Top pattern could not only achieve its projection target at 1.4820-1.4800, but it also confirmed a bigger Head and Shoulders pattern.
The bears managed to break down 1.4950 corresponding to 50% Fibonacci level once before (the nearest support level). This exposed the price level of 1.4750 (61.8% Fibonacci) on March 10.
As expected, the bears failed to fixate below 1.4750 on a daily basis. This hindered further bearish progression giving some time for a sideway consolidation for retesting of 1.4945 (50% Fibonacci).
After a few days of indecision around 1.4750, the bulls initiated a bullish spike off 1.4725, and finally they were able to push above the upper limit of the 4H congestion zone.
Two bullish spikes above 1.4950 (50% Fibonacci level on the daily chart) were executed. However, the bulls fail to pursue the bullish breakout leading to its failure.
On the other hand, the lower limit of the expanding wedge located around 1.4850 failed to provide enough support for the pair. Instead, bearish breakdown took place pushing towards 1.4730 (61.8% Fibonacci level) which was broken down as well as depicted on the chart.
Overall, the daily chart suggests bearish tendency especially if the daily candlesticks maintain closures below 1.4740.
On the other hand, price zone above 1.4650-1.4700 should be watched for price action. A recent prominent low was established around 1.4659 on May 10.
Bullish reaction may be expressed around these levels to offer a valid BUY entry with stop loss as daily closure below 1.4660.
The material has been provided by InstaForex Company - www.instaforex.com
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