FX.co ★ EUR/USD intraday technical levels and trading recommendations for November 1, 2013

The price zone of 1.3560-1.3600 represented a valuable supply zone that kept the price below for almost two months. The pair was showing some bearish rejection manifested in the daily candlesticks as seen on October 10, a bearish engulfing daily candlestick. However, lack of bearish follow-up was witnessed around 1.3480. Instead, a significant bullish rejection was expressed leading to a Flag continuation pattern.

According to the final readings of the European Statistical Office on Wednesday, the European inflation was 1.1% in September, in line with preliminary projections, it settled at 1.3% in August. This constituted to the recent bullish jump that took place on October 22.

The price level of 1.3560 is the upper limit of the most recent congestion zone. That is why, persistence of the current breakthrough and fixation above 1.3715 enabled the pair to reach 1.3800.

Although the pair was expected to need some time to achieve such a target having important levels on its way, daily closure above 1.3710 allowed quick achievement for this target.

Previous daily candlesticks represented indecision around 1.3800 strongly suggesting bearish retracement towards 1.3700 theb 1.3650 which took place shortly after.

Fundamentally, the massive decline in retail sales reflected sharp contraction in Italy, which witnessed the slowest decline in sales in two years during the previous month. Moreover, sales in France fell, while the rate of growth in Germany was the worst since the month of May.

The current price zone extending between 1.3550-1.3460 is a valuable demand zone where price action should be watched carefully. Hopefully providing a valid BUY entry around 1.3500 with SL located below 1.3460.