EUR/USD Daily Outlook

Daily Pivots: (S1) 1.2655; (P) 1.2851; (R1) 1.3177; More

EUR/USD's break of 1.2897 minor resistance indicates that fall from 1.3290 has completed. The corrective structure suggests that rebound from 1.2329 is resuming and further upside is in favor to retest 1.3290 high first. On the downside, though, below 1.2525 will flip intraday bias back to the downside for retesting 1.2329 low.

As discussed before, there is no doubt that a short term bottom is in place at 1.2329. With EUR/USD just missed 38.2% retracement of 1.4867 to 1.2329 at 1.3299, it's believed that fall from 1.4867 has completed too and EUR/USD is developing into choppy sideway consolidation in the larger down trend from 1.6038. Note that the path and length of the current consolidation could be quite unpredictable. Nevertheless, firstly, intraday upside momentum should start to diminish again in 1.3258/3768 resistance zone even in case of another rise. Secondly, as long as 1.2329 low holds, such consolidation could extend further. A break out on either side is needed to confirm that the consolidation has completed.

In the bigger picture, as discussed before, the strength of the fall from 1.6038 reinforces the case that whole decline from 1.6038 is developing into a five wave impulsive fall. The completed decline from 1.4867 to 1.2329 might represent the third wave decline in the five wave sequence. Consolidation from 1.2329 might represent the fourth wave consolidation. Hence, another decline is still expected before making a medium term bottom. Below 1.2329 will target next long term fibonacci level of 50% retracement of 0.8223 to 1.6038 at 1.2131 or even further to 1.1639 key medium term support. On the upside, sustained break of 1.3768 cluster resistance (38.2% retracement of 1.6038 to 1.2329 at 1.3746) is needed to invalidate this view and indicate that whole decline from 1.6038 has made a medium term bottom.

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