The market was messy last week because of the war in Ukraine. There were unexpected scenarios on the chart.
We can see the price has fallen after making a bullish Pin bar on the support level at 1.35815. The bullish Pin bar showed that the price could move higher, breaking below the support line and closing the day below the support line and triangle support line.
The next day, on Wednesday, the price fell almost 300 pips. The price has broken through the support level at 1.34123 and stopped on the second support level at 1.33000.
From there, the price bounced back up to the first resistance level at 1.34123 and stopped.
The price is now back in the downtrend channel. The channel is on the confluence of resistance where horizontal and downtrend channel resistance lines are crossing.
The current resistance level is not a strong resistance level for the bulls, visible on the chart. The 1.34123 resistance level had no history of the price when bulls tried to break above.
We can expect the price to increase without too many problems from the current level.
The price could stop on the 1.35815 level, which is resistance for the bulls. We can see the price had problems breaking above in the past. We can expect a similar scenario again.
We need the price to close above 1.34123 daily to confirm a move to 1.35815 as the next level.
If the price returns to 1.34123 after breaking above it, it could be a position to enter into the trade if there is a bullish price action signal.
That means the price has found support on the 1.34123, and it is ready to move higher. The entry-level would be around 1.34123, with stop loss at 1.33500.
The profit target is 1.35500, which is the start of the supply zone market on the chart. There we could see sellers stepping in and preventing the price from moving higher.
If the price closes below 1.33600 daily, it could be the start of the bearish market. Until then, the market is more inclined to move higher based on the technical analysis outlook.
Frano is an engineer, author, forex trader and the owner of a blog where he teaches forex courses for beginners. Frano created a website on how to trade forex to share his knowledge, market analysis which is also published on forexFactory.com, investing.com and many other trading related websites.