EUR/USD’s decline extended to as low as 1.1966 last week. While downside momentum has been diminishing, there is no sign of bottoming yet. Initial bias remains on the downside this week for 200% projection of 1.2475 to 1.2214 from 1.2413 at 1.1891. Break will target 261.8% projection at 1.1730. On the upside, though, break of 1.2008 minor resistance will indicate short term bottoming and bring stronger rebound back to 4 hour 55 EMA (now at 1.2077) or above.
In the bigger picture, current decline and firm break of 1.2154 support confirms rejection by 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. A medium term top should be in place at 1.2555 and deeper decline would be seen back to 38.2% retracement of 1.0339 to 1.2555 at 1.1708 first. With current downside acceleration, there is prospect of hitting 61.8% retracement at 1.1186 before completing the decline. But still, we’ll need to look at the structure to before deciding if it’s a corrective or impulsive move.
In the long term picture, the rejection from 38.2% retracement of 1.6039 to 1.0339 at 1.2516 argues that long term down trend from 1.6039 (2008 high) might not be over yet. EUR/USD is also held below decade long trend line resistance. Focus will now turn to 1.1553 support. Break there would raise the chance of retesting 1.0339 low. It’s early to tell, but the chance of long term bullish reversal is fading.
