EUR/USD’s strong rebound last week suggests that corrective pattern from 1.0635 has started the third leg. Initial bias remains on the upside this week for 1.1147 resistance. But strong resistance should be seen from 61.8% retracement of 1.1496 to 1.0635 at 1.1167 to limit upside. On the downside, break of 1.0891 minor support will turn bias back to the downside for 1.0727 support. However, sustained break of 1.1167 will dampen our view and target 1.1496 key resistance.
In the bigger picture, as long as 1.1496 resistance holds, whole down trend from 1.2555 (2018 high) should still be in progress. Next target is 1.0339 (2017 low). However, sustained break of 1.1496 will argue that such down trend has completed. Rise from 1.0635 could then be seen as the third leg of the pattern from 1.0339. In this case, outlook will be turned bullish for retesting 1.2555.
In the long term picture, outlook remains bearish for now. EUR/USD is held below decade long trend line that started from 1.6039 (2008 high). It was also rejected by 38.2% retracement of 1.6039 to 1.0339 at 1.2516 before. On break of 1.0339, next target will be 100% projection of 1.3993 to 1.0339 from 1.2555 at 0.8901.
