EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.5417; (P) 1.5452; (R1) 1.5507; More

EUR/USD's rally earlier today was limited below 1.5569/94 resistance zone and retreats again. Outlook remains unchanged as further rally is still mildly in favor as long as 1.5396 minor support holds. Note that the current development argues that EUR/USD might be completing an intraday head and shoulder bottom pattern (ls: 1.5360, h: 1.5284, rs: 1.5396). Focus is now on 1.5569/94 resistance zone and break will confirm the completion of the reversal pattern. In other words, decline from 1.6019 should have completed in such case and strong rebound could then be seen to retest this record high. On the downside, though, below 1.5396 will flip intraday bias back to the downside for retest of 1.5284 low first.

In the bigger picture, as mentioned before, EUR/USD's rise from 1.4309 should have completed at 1.6019 with a diagonal triangle pattern that started at 1.5342 and with bearish divergence condition in daily MACD and RSI. Deeper decline is in favor to be seen to 1.4309 and 1.4966 support zone. However, strong rebound from the current level, followed by break of 1.5594 resistance, will suggest that price actions from 1.6019 is probably just developing into another sideway consolidation. But still, short term risk is on the downside before sustained break of 1.6019 high.

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