EUR/USD dropped to 1.2052 last week, but drew support from 1.2058 cluster support (38.2% retracement of 1.1602 to 1.2348 at 1.2063) and rebounded. Intraday bias is mildly on the upside this week for 1.2222 minor resistance first. Break there will bring retest of 1.2348 high. However, sustained break of 1.2058 will extend the correction from 1.2348 to 61.8% retracement at 1.1887.
In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally could be seen to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). This will remain the favored case as long as 1.1602 support holds. We’d be alerted to topping sign around 1.2516/55. But sustained break there will carry long term bullish implications.
In the long term picture, the case of long term bullish reversal continues to build up, with bullish convergence condition in monthly MACD, sustained trading above 55 month EMA and long trend falling trend line. Focus is now on 1.2555 cluster resistance (38.2% retracement of 1.6039 to 1.0339 at 1.2516 ). Decisive break there will confirm and target 61.8% retracement at 1.3862 and above.
