The price zone 1.3800-1.3880 (dotted on the chart) provided considerable SUPPLY for the EUR/USD pair. This price zone managed to pause the bullish momentum that originated off the depicted bullish trend line.
A Double Top pattern was formed after the neckline located at 1.3700 got broken-down. Projection targets have already been hit shortly after.
On the other hand, we should highlight Thursday and Monday's bullish engulfing daily candlesticks which emerged off 1.3500 (the lower limit of the ongoing channel) thus fixating again above 1.3560 (Key-Level corresponding to the previous prominent bottom).
As long as the bulls keep defending the recent low around 1.3575, we consider the possibility of a bullish Head and Shoulders pattern with the neckline around 1.3650 with a breakout projection target to be anticipated around 1.3750.
The price zone 1.3600-1.3560 ( 50% and 61.8% Fibonacci levels ) should be anticipated for a bullish price action offering a valid BUY entry at retesting.
This price zone corresponds not only to significant Fibonacci levels but also to the backside of the broken bearish channel depicted on the chart.
On the other hand, breakdown of 1.3550 invalidates the bullish structure allowing the bears to pursue towards lower targets. NB: This is less likely to occur in the current situation although the probability exists.
The material has been provided by InstaForex Company - www.instaforex.com
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