EUR/USD Daily Outlook

Daily Pivots: (S1) 1.2322; (P) 1.2503; (R1) 1.2673; More

EUR/USD recovers mildly after hitting 1.2329 but after all, intraday bias remains on the downside as long as 1.2685 minor resistance holds. Further decline is still expected to next target of 100% projection of 1.4867 to 1.3258 from 1.3768 at 1.2159. On the upside, above 1.2685 will indicate that an intraday low is in place and bring stronger recovery to 4 hours 55 EMA (now at 1.2970). But upside should be limited below 1.3258 resistance and bring down trend resumption.

In the bigger picture, some key important long term support levels were taken out last week without much hesitation. The strength of the fall as well as the breaking of 100% projection of 1.6038 to 1.3381 from 1.4867 at 1.2710 reinforces that case that whole decline from 1.6038 is developing into a five wave impulsive fall. As mentioned before, if this is true, EUR/USD is probably still in the middle of it and should eventually extend to below 1.1639 key long term support before making a medium term bottom. Break of 1.3768 resistance is needed to invalidate this view and indicates that a medium term bottom is formed earlier than we thought. Otherwise, medium term outlook will remain bearish even in case of strong rebound.

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