FX.co ★ EUR/USD intraday technical levels and trading recommendations for October 17, 2013

Daily overview:

Price zone of 1.3560-1.3600 represented a valuable supply zone that kept the price below for almost two months. The pair was showing some bearish rejection manifested in the daily candlesticks of the previous weeks as well as seen on October 10, a bearish engulfing daily candlestick. However, lack of bearish follow-up was witnessed around 1.3480. Instead, a signficant bullish rejection was expressed leading to a Flag continuation pattern.

According to the final readings of the European Statistical Office on Wednesday, European inflation hits 1.1% in September, according to preliminary projections it settled at 1.3% in August. This constituted to the recent bullish jump that took place today.

The price level of 1.3560 is the upper limit of the most recent congestion zone. That is why the price action should be watched now as persistence of the current breakthrough and fixation above it will enable the pair to reach 1.3700 corresponding to an established high in Jan 2013.

The bullish scenario was activated as the pair returned to fix above 1.3560, pushing above 1.3600. Then, there is an expected bullish swing towards 1.3700 supported by the fundamental situation in the euro zone which showed higher industrial production data as well as lower inflation data than expected in August .

The projection target of the depicted Flag pattern is roughly located around 1.3800. However, technically the pair may need some time to achieve such a target having important levels on its way.