EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2394; (P) 1.2494; (R1) 1.2553; More

EUR/USD's recovery continues in early US session and short term outlook remains unchanged. Recent development argues that triangle consolidation from 1.2329 is near to completion. Having said that, the current recovery is expected to be limited below 1.2819 resistance and bring fall resumption to next target of 50% retracement of 0.8223 to 1.6038 at 1.2131. However, above 1.2819 will invalidate the triangle scenario and suggests that stronger rebound might be seen to 1.3290 before completing consolidation from 1.2329. Nevertheless, upside should be limited below 1.3768 cluster resistance and bring down trend resumption.

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.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box