The market was pushed lower after breaking below 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 has lost almost 850 pips since the beginning of 2015. Moreover, EUR/USD bears have already pushed the price slightly below the monthly demand level of 1.0550 (established on January 1997).
The previous month closure had a negative impact on the EUR/USD pair. However, April's monthly candlestick came as a bullish engulfing candle on the chart.
In the long term, a bearish breakout of the monthly demand level at 1.0550 should not be excluded as the long-term breakout is projected with a target at 0.9450.
However, a bullish corrective movement towards 1.1500 may be executed if May's monthly high (1.1465) gets breached first (bulls have tried recently, but they failed).
After such a long bearish rally (which started around the levels of 1.1300), bullish rejection took place at 1.0570 (monthly demand level).
Multiple ascending bottoms were established around the levels of 1.0470, 1.0550, and 1.0850. These levels corresponded to the daily uptrend depicted on the chart.
Further bullish pressure was observed until bearish rejection was applied around 1.1400 (Fibonacci Expansion 100% on the H4 chart - near the depicted daily supply level).
A recent closure below 1.1300 (the lower limit of the H4 channel) caused a quick bearish decline towards 1.1140 (manifested on the H4 chart).
A bearish decline towards 1.1050-1.1080 should not be excluded as well.
However, we should note that the price zone of 1.1030-1.1130 (depicted in Blue on the chart) constitutes a significant daily demand zone. That is why, the recent few daily candlesticks are reflecting indecision of the market around this price zone.
On the other hand, the level of 1.1300 represents a newly established supply level (neckline of the double-top pattern). It should be watched for sell entries if a bullish pullback occurs soon.
The material has been provided by InstaForex Company - www.instaforex.com