The market was pushed lower after breaking below the major demand levels around 1.2100 and 1.2000 where historical bottoms were previously hit back in July 2012 and June 2010.
The EUR/USD pair lost almost 850 pips since the beginning of 2015. Moreover, the EUR/USD bears have already pushed the market slightly below the monthly demand level of 1.0550 (established on January 1997).
The previous monthly closure had a negative impact on the EUR/USD pair. However, April's monthly candlestick came as a bullish engulfing candle as depicted on the chart.
In the long term, bearish breakdown of the monthly demand level at 1.0550 should not be excluded as the long-term breakout target is projected towards the level of 0.9450.
A bullish corrective movement towards 1.1500 and 1.1600 is still possible provided that May's monthly candlestick high (1.1465) gets breached as soon as possible.
The obvious bearish breakout of the weekly demand level at 1.1100 allowed the price to fall dramatically shortly afterwards.
After such a long bearish rally (which started around the levels of 1.1300), bullish rejection was expressed at 1.0570 (monthly demand level).
A bullish continuation pattern with an ascending bottom was established around the level of 1.0650.
That is why bears failed to hinder ongoing bullish momentum around the key zone of 1.1150 to 1.1050 on April 29. Temporal bullish fixation above 1.1100 took place shortly after.
Further bullish advancement was enhanced until bearish pressure was applied around 1.1450 (just below the depicted supply level of 1.1500).
Last week, a bearish pullback took place towards 1.0800 -1.0830 where a bullish breakout pattern with an ascending bottom was established on the H4 chart.
That is why, a profitable buy entry was suggested at retesting of 1.0820. S/L should be advanced to 1.1200 to offset the risk.
On the H4 chart, bullish persistence above the level of 1.1190 is mandatory to pursue towards 1.1390 (Fibonacci Expansion 100%).
The price zone of 1.1180-1.1230 should be defended by bulls to keep enough bullish momentum. Otherwise, long-term bullish positions should be closed.
The material has been provided by InstaForex Company – www.instaforex.com