Despite edging lower to 1.4045, subsequent strong rebound from there and break of 1.4326 resistance argues that fall from 1.4446 has completed at 1.4045 already. The three wave corrective structure, in turn indicates that medium term rise is not completed yet. Initial bias will remain on the upside as long as 1.4208 minor support holds and further rise should be seen to 1.4446 high and above. On the downside, below 1.4208 will turn intraday outlook neutral again. But break of 1.4045 support is needed to revive the case that EUR/USD has already topped out. Otherwise, another rally will be in favor in case of pull back.
In the bigger picture, current development dampens the case that EUR/USD has topped out already at 1.4446. But after all, there is no change in the view that rise from 1.2456 is the third leg of the whole consolidation pattern that started at 1.2329. Price actions from 1.3747 may be developing into a diagonal triangle as the fifth wave in such five wave sequence from 1.2456. While another high above 1.4446 is likely, upside should be limited by 61.8% retracement of 1.6039 to 1.2329 at 1.4622 and finally bring reversal. On the downside, below 1.4050 will be another signal that EUR/USD has already topped out and break of 1.3747 support will be the confirmation. In such case, deeper decline should be seen that sends EUR/USD through 1.2329 low eventually.
In the long term picture, price actions from 1.2329 are treated as 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 .
EUR/USD Weekly Outlook
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