EUR/USD rose to 1.2242 last week but reversed from there. The development suggests that rebound from 1.1951 has completed as the second leg of the corrective pattern from 1.2348. Initial bias remains on the on the downside this week. Break of 1.2022 support should confirm the start of the third leg, towards 100% projection of 1.2348 to 1.1951 from 1.2242 at 1.1845. On the upside, above 1.2140 minor resistance will turn bias neutral first.
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.