On Friday, the EUR/USD pair expressed weekly bullish engulfing candlestick that closed at 1.3067 after hiting the previously mentioned demand zone extending between 1.2750-1.2820.
This demand zone corresponds to a previous low established in March as well as another bottom established in May, this pushed the pair to trade again above the depicted broken uptrend line.
It was expected for the pair to gain some recovery off this support zone that pushed towards 1.3000, which was bypassed towards 1.3110 then 1.3200.
It is important to note that daily closure below 1.3050 enhances the bearish view and supports resuming the ongoing bearish movement. Otherwise, the way towards 1.3225 remains open for further re-testing supported by the daily closure we had Yesterday above 1.3050.
Signs of bullish reversal appeared on Wednesday, which allowed bulls to benefit from this expected correction move towards 1.3000 with SL as 4H closure below 1.2750.
Importance of 1.3050-1.3100 is manifested on the 4H chart as it corresponded to SMA 100 and previous congestion zone, indecision around this zone forced the pair to establish a consolidation triangle which was broken to the upside confirming the breakout opportunity with target at 1.3230.
4H closure below 1.3000 opens the way towards the recent lows around 1.2880 initially. Otherwise, breakthrough above 1.3100 opens the way directly towards 1.3225 where price action should be watched carefully.
Fundamentally, the German economic sentiment index unexpectedly deteriorated in July, reflecting concerns about the impact of the euro zone debt crisis on the region's largest economies, according to industrial data released today.
