The price zone of 1.3400-1.3460 represented a valuable supply zone that kept the price below for months. However, a significant bullish support was present around 1.3100 leading to a bullish breakout pattern.
According to readings of the European Statistical Office disclosed three weeks ago, the European inflation was at 1.1% in September, in line with preliminary projections, while it settled at 1.3% in August. This constituted to the recent bullish jump that took place on October 22.
Previous daily candlesticks represented indecision around 1.3800 initiating a bearish retracement towards 1.3450 which failed to provide strong support, and then 1.3280 was tested shortly after.
Price zone of 1.3280 - 1.3300 provided strong demand for the pair pushing it higher above 1.3400 - 1.3450 (prominent technical levels). Persistence of the current bullish channel to push above 1.3450 level allowed the pair to reach the next supply level around 1.3640 then 1.3670 as expected.
Price action should be watched around 1.3650, a bullish breakthrough above these levels will enable the bulls to reach 1.3720.
SMA 100 located around 1.3510-1.3550 has been providing signficant support for the pair since Wednesday, pushing the pair higher again towards 1.3610 and possibly 1.3670.
Price level of 1.3650 corresponds to a prominent high established on October 7. That's why a 4H breakthrough will enhance the bullish momentum.
Based on the market analysis, there may be a valid sell entry around 1.3640-1.3670 with SL as daily closure above 1.3700. However, bearish price action should be waited as the current bullish impulse is quite strong.
