EUR/USD’s break of 1.1688 support last week suggests that recovery from 1.1612 has completed at 1.1880. More importantly, corrective fall from 1.2011 is likely resuming. Initial bias stays on the downside this week for 1.1612 support first. Break will confirm this case and target 38.2% retracement of 1.0635 to 1.2011 at 1.1485. On the upside, above 1.1758 minor resistance will mix up the near term outlook and turn intraday bias neutral first.
In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally could be seen to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). This will remain the favored case as long as 1.1422 resistance turned support holds.
In the long term picture, the strong break of 55 month EMA is taken as a sign of long term trend reversal. Immediate focus will be on decade long trend line resistance (now at 1.1638). Sustained trading above there will add more credence to the case that down trend from 1.6039 (2008 high) has finished at 1.0339. Further break of 1.2555 cluster resistance (38.2% retracement of 1.6039 to 1.0339 at 1.2516 ) will confirm and target 61.8% retracement at 1.3862 and above.
