EUR/USD Daily Outlook

Daily Pivots: (S1) 1.4839; (P) 1.4902; (R1) 1.4988; More

EUR/USD continues to consolidate in tight range above 1.4815 today. As discussed before, with 4 hours MACD staying above signal line, an intraday low should be in place and some sideway trading could now be seen. Nevertheless, consolidation should be relatively brief as long as 1.5085 minor resistance holds. Below 1.4815 will indicate recent fall from 1.6038 has resumed for next medium term support at 1.4309. On the upside, above 1.5085 will indicate that a short term bottom is in place and bring retest of double top neckline resistance at 1.5284 before staging another fall.

In the bigger picture, break of 1.5284 support confirmed the double top reversal pattern (1.6019, 1.6038). A medium term top should at least be formed on bearish divergence condition in daily MACD and RSI as well as weekly RSI. However, the question is still on whether whole medium term up trend from 1.1639 (05 low) has completed and it's still early to make a conclusion yet.

Focus will now be on a) the structure of the decline from 1.6038 and subsequent rebound b) whether key support level of 1.4309, (38.2% retracement of 1.1639 (05 low) to 1.6038 at 1.4358, 61.8% retracement of 1.3262 to 1.6038 at 1.4322) will hold; c) whether next trend line support (1.1825, 1.2483, now at 1.4301) will hold; d) whether weekly MACD will turn negative and e) whether monthly MACD will cross below signal line. So far, the scale and strength of the fall from 1.6038 is mildly favoring the case the up trend from 1.1639 has indeed completed but developments in other items mentioned will be closely watched to affirm this case.

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