EUR/USD continued stay in sideway trading last week and outlook is unchanged. Initial bias remains neutral this week and more sideway trading could be seen. On the downside, break of 1.1168 will target 38.2% retracement of 1.0635 to 1.1422 at 1.1121. Sustained break there will argue that whole rebound from 1.0635 has completed and bring deeper fall to 61.8% retracement at 1.0936. On the upside, break of 1.1348 will likely resume the rise from 1.0635 through 1.1422 to 1.1496 key resistance.
In the bigger picture, as long as 1.1496 resistance holds, whole down trend from 1.2555 (2018 high) should still be in progress. Next target is 1.0339 (2017 low). However, sustained break of 1.1496 will argue that such down trend has completed. Rise from 1.0635 could then be seen as the third leg of the pattern from 1.0339. In this case, outlook will be turned bullish for retesting 1.2555.
In the long term picture, outlook remains bearish for now as it’s staying below 55 month EMA, as well as decade long falling trend line. Down trend from 1.6039 (2008 high) is still in favor to extend through 1.0339 down the road. However, sustained trading above 55 month EMA will firstly suggest that fall from 1.2555 has completed. It would also be an early indication on long term bullish reversal. Focus would be back on 1.255 cluster resistance (38.2% retracement of 1.6039 to 1.0339 at 1.2516 ).
