Back in June 24, the EURUSD looked overbought around 1.1400 facing a confluence of supply levels.
Thus, a bearish movement was initiated towards 1.1275 followed by a deeper bearish decline towards 1.1235 (the lower limit of the previous bullish channel) which failed to provide enough bullish support for the EUR/USD pair.
In the period between 8 – 22 July, sideway consolidation-range was established between 1.1200 – 1.1275 until a triple-top reversal pattern was demonstrated around the upper limit.
Shortly after, evident bearish momentum (bearish engulfing H4 candlestick) could bring the EURUSD back below 1.1235.
Early bearish breakdown below 1.1175 facilitated further bearish decline towards 1.1115 (Previous Weekly Low) where temporary bullish rejection was demonstrated before bearish breakdown could take place on July 31.
On July 31, Temporary Bearish breakdown below 1.1115 allowed further bearish decline towards 1.1025 (lower limit of the depicted recent bearish channel) where significant signs of bullish recovery were demonstrated.
Risky traders were advised to look for bullish persistence above 1.1050 as a bullish signal for Intraday BUY entry with bullish target projected towards 1.1115, 1.1175 and 1.1235.
It’s already running in profits. S/L should be advanced to 1.1160 to secure existing profits.
During the past week, the depicted Key-Zone around 1.1235 has been standing as a prominent Supply Area where TWO Bearish Engulfing H4 candlesticks were demonstrated.
Earlier Yesterday, another bullish visit was demonstrated towards 1.1235 where another episode of bearish rejection was anticipated.
Thus, the EUR/USD remains trapped between 1.1235-1.1175 until breakout occurs in either directions (probably to the downside).
Bearish breakdown below 1.1175 is mandatory to allow further bearish decline towards 1.1125-1.1115 where another intermediate-term bullish position can be offered (The right shoulder of the expected reversal pattern).
Trade recommendations :
Conservative traders should wait for a deeper bearish pullback towards 1.1125-1.1115 for a valid BUY entry (where the right shoulder of the reversal pattern is expected to be located).
S/L should be placed just below 1.1080 while initial T/P levels should be located around 1.1160 and 1.1200.