FX.co ★ Intraday technical levels and trading recommendations on EUR/USD for October 16, 2014

The recent bearish slide below 1.2870 invalidated the previous attempt of bullish reversal. Thus, bearish decline towards 1.2680 and 1.2570 took place shortly after.

Last week, the EUR/USD pair looked oversold and was trading beyond the lower limit of the channel before bullish momentum could get it back inside the channel. That's why, price action around 1.2560 was important to determine the next destination.

Bullish recovery was expressed off 1.2500 and 1.2600 to push towards 1.2700 and 1.2830.

The origin of the bullish engulfing pattern (around 1.2600) provided a good BUY position as suggested in previous articles. It's running in profits now.

The upper limit of the movement channel (1.2880-1.2900) is being approached. Bearish pressure should be anticipated to be applied.

The medium-term bearish trend remains intact as long as the bears keep defending the price zone around 1.2870-1.2900 (the recent consolidation zone).

A short-term bullish Head and Shoulders pattern was established on the 4H chart as anticipated. 4H fixation above 1.2700 confirmed the reversal and allowed the bulls to reach 1.2850.

A good BUY position was suggested around the origin of the bullish Head and Shoulders pattern. The final target is being approached today around 1.2900.

Recommendation :

Price action should be watched around 1.2870-1.2900 ( upper limit of the channel and previous broken demand level ) for another long-term SELL position.

Stop loss for this short position should be located above 1.2965.