In March, failure of the bulls to fixate above 1.3880 applied enough bearish pressure to form a bearish leg towards the recent demand zone around 1.3700.
At retesting of 1.3700, significant bullish pressure was applied pausing the bearish decline off 1.3965 which led to another ascending limb towards 1.3880.
The last bullish breakout above 1.3880 topped at 1.3950 (Notice the most recent top established around 1.3965) showing bearish domination of the market which formed another bearish leg.
The price level of 1.3800 has offered support for few weeks until we had bearish breakdown when the market expressed a strong full-body bearish daily candlestick as depicted on the chart.
Thus, a double-top reversal pattern is being established with neckline located at 1.3700 where a strong bullish daily candlestick was expressed indicating bullish presence around there.
Last week, the bears produced quite strong bearish reaction that broke-down successive support levels around 1.3800 and 1.3745.
This indicates the dominant bearish momentum with high probability to achieve the reversal pattern projection targets after breakdown of 1.3700 handle (neckline of the double-top pattern).
Previously, the depicted uptrend line (the blue trendline) came to meet the pair roughly at 1.3700-1.3680 enhancing this price zone as significant intraday demand. This led to the recent bullish impulse above 1.3880.
The recent established bottom around 1.3810 could achieve higher value above 1.3880. The bulls topped at 1.3950. However, these levels corresponded to the upper limit of the ongoing bullish channel which applied significant bearish reaction.
A strong corrective movement towards 1.3850 and 1.3800 was executed immediately as expected. This led again towards 1.3770 and cleared the way towards 1.3690 ( previous prominent bottom ).
For the bulls, the price zone of 1.3710 - 1.3670 remains the nearest demand level for them to initiate a bullish corrective move towards 1.3740.
A short-term bullish "Head and Shoulders" pattern is being established on the 4H chart. The right shoulder was established on Friday around 1.3690 offering a valid BUY entry with stop loss located below 1.3640.
The bullish corrective movement will be targeting at 1.3800 as long as the recent bottom around 1.3650 remains defended by the bulls.
Breakdown of the recent bottom 1.3640 invalidates the bullish scenario in the short-term prospective.
The material has been provided by InstaForex Company - www.instaforex.com
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