On December 30, a bearish ABC reversal pattern was initiated around 1.1235 which turned the technical outlook into bearish.
Since then, the EURUSD pair has trended-down within the depicted bearish channel until few weeks ago, when extensive bearish decline established a new low around 1.0790 where the EUR/USD pair looked OVERSOLD after such extensive bearish decline.
On February 20, recent signs of bullish recovery were demonstrated around 1.0790 leading to the recent steep bullish movement towards 1.1000 then 1.1175.
The price level of (1.1175) constituted a transient congestion-zone in confluence with the origin of the previously-mentioned ABC pattern.
Temporary consolidation range was demonstrated down to 1.1100-1.1095 where another bullish limb was quickly expressed targetting 1.1235, 1.1360 and finally 1.1480.
In other words, the price-Levels of 1.1235 (KeyZone) and 1.1360 were being breached to the upside until earlier last week when a (123) bearish reversal pattern was initiated around the price level of 1.1480.
This turned the short-term technical outlook for the EURUSD pair into bearish when bearish persistence below the Keyzone of 1.1235 was maintained on a daily basis.
For conservative traders, the previous bullish pullback towards 1.1235 was suggested to be considered for bearish rejection and a valid SELL entry.
On the other hand, the mentioned intermediate-term bearish Head & Shoulders pattern has achieved all of its projection target levels.
Currently, the EURUSD pair is re-testing the backside of the broken bearish channel where signs of bullish rejection should be anticipated.
The recent bullish engulfing H4 candlesticks as well as the recently-demonstrated ascending bottoms indicate a high probability bullish pullback at least towards 1.0880, 1.0980 and 1.1075 (Fibonacci Level 50%) that should be watched by conservative traders.
That’s why, Intraday traders should be looking for bullish persistence above 1.0790 – 1.0830 as this would probably enhance further bullish advancement initially towards 1.0980.
On the other hand, H4 candlestick bearish closure below 1.0650 invalidates the previous scenario and enables further bearish decline towards 1.0606 and probably 1.0580.
The material has been provided by InstaForex Company – www.instaforex.com