FX.co ★ Intraday technical levels and trading recommendations on EUR/USD for October 20, 2014

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 1.2580-1.2600 (the lower limit of the channel) 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 (back inside the channel).

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 is anticipated to be applied offering a valid SELL entry.

The medium-term bearish trend remains intact as long as the bears keep defending the price zone around 1.2880-1.2900 (the recent consolidation zone).

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

A valid BUY position was suggested around the origin of the bullish Head and Shoulders pattern (price level of 1.2660). 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 one more SELL position.Stop loss for this short position should be located above 1.2965.

On the other hand, price level of 1.2730-1.2760 should be watched for price action. A break below this price zone ( the lower limit of the 4H channel ) indicates a SELL position towards 1.2620 initially.