EUR/USD Weekly Outlook

EUR/USD rebounded to 1.4137 early last week but failed to take out 1.4171 resistance, thus didn't confirm completion of fall from 1.4337. The three wave structure of the rebound from 1.3747 to 1.4137 argues fall from 1.4337 is still in progress but the bearish case was not confirmed by a break of 1.3826 support neither. After all, outlook in EUR/USD is rather mixed and we'd prefer to stay neutral until at least a break of 1.3826/4137 range. In any case, above 1.4137 will suggest that rise from 1.3747 is still in progress and will favor extension to 1.4337 or above. On the downside, below 1.3826 support will indicate that rebound from 1.3747 has completed and fall from 1.4337 is resuming, in this case, to test trend line support (now at 1.3442).

In the bigger picture, rise from 1.2456 is treated as the third leg of medium term triangle consolidation from 1.2329 (first leg completed at 1.4719, second at 1.2456). With daily MACD staying below signal line, it's likely that such rise has completed at 1.4337 already. Break of 1.3747 will add more credence to this case and firm break of channel support (now at 1.3442) will confirm and bring deeper fall to 1.2456/2884 support zone. Though, in such case, as we're favoring that it's developing into triangle consolidation, downside should be contained by 1.2456/2884 support zone and bring one more rise to complete the consolidation.

On the upside, above 1.4171 will delay the bearish case and indicate that rise from 1.2456 is still in progress. Nevertheless, as this rise is still treated as part of the medium term consolidation, it should be limited by 1.4719/4867 resistance zone. Hence, upside potential should be limited and focus will still be on reversal signal in case of another rise.

In the long term picture, as we're favoring the case that price actions from 1.2329 are merely consolidation in the larger down trend, the fall from 1.6039, therefore, is expected to resume after completing the consolidation. Below 1.2329 will confirm that such down trend has resumed for at least a test on 1.1639 key long term support. We'll hold on to this long term bearish view as long as 1.4867 resistance holds .

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