EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3526; (P) 1.3655; (R1) 1.3732; More

EUR/USD's outlook remains unchanged. Break of 1.3545 minor support indicates that recovery from 1.3443 has completed at 1.3785. Intraday bias is mildly on the downside for retesting this low. Break will confirm that recent decline from 1.4867 has resumed for next medium term fibonacci level of 61.8% retracement of 1.1639 to 1.6038 at 1.3319 first. Break will target long term fibonacci support of 1.3053. On the upside, while another recovery could still be seen, short term outlook remains bearish as long as 1.3907 resistance holds. Though, above 1.3907 will indicate that a short term bottom is in place and bring stronger rebound.

In the bigger picture, sustained trading below 1.3851 medium term support confirms that whole decline from 1.6038 has resumed. Next medium term target will be 61.8% retracement of 1.1639 to 1.6038 at 1.3319. So far, the strength of the fall from 1.6039 and the structure argues that it's something of a larger degree. The case of long term reversal is also building up. Nonetheless, note that EUR/USD is now at an important support zone with a) prior medium term high at 1.3668 (Dec 04 high); b) 38.2% retracement of 0.8223 (00 low) to 1.6038 at 1.3053 and c) 55 Months EMA at 1.3359. EUR/USD could at make a short term bottom between 1.30 and 1.36 stage a noticeable rebound before resuming the down trend. Hence, it's not advisable to chase decline when EUR/USD enters into this zone and profits on short positions could be taken if reversal signal occurs. On the upside, though, above 1.4867 is needed to indicate that a medium term bottom is in place. Otherwise, medium term outlook remains bearish.

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