EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.4577; (P) 1.4613; (R1) 1.4678; More

EUR/USD remains firm today and rally from 1.4438 extends further to as high as 1.4696 so far. At this point, intraday bias remains on the upside as long as 1.4632 minor support holds. As discussed before, firm break of 1.4672 resistance will confirm that fall from 1.4951 has completed and will encourage stronger rise to retest 1.4951 high first. However, bounce off from the current level and a break below 1.4532 support will indicate that rise from 1.4438 is merely correction to fall from 1.4951 only and has completed. In such case, another fall should then be seen to 1.4438 low first.

In the bigger picture, the sharp reversal after failing 1.4966 record high suggests that EUR/USD is still bounded in consolidation that pattern that started at 1.4966. One of the probable case is triangle formation with four of five waves completed at 1.4039, 1.4921, 1.4356 and 1.4951. That is the current fall from 1.4951 should be the last wave of the triangle. Another probable case is that the first leg of the consolidation has completed at 1.4309, second leg completed with three waves up to 1.4951. In others, fall from 1.4951 is probably the final leg of the consolidation too.

Having said that, our focus is not on where the current fall will end as the odds of a triangle and a-b-c consolidation is not decidedly different. Instead, focus is on 1.4672 resistance as break of which will be an important signal that fall from 1.4951 has completed. And hence, in such case, it will be a signal that the consolidation that started at 1.4966 has completed too and retest of this high should then be seen.

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