EUR/USD dropped to as low as 1.1951 last week and breached medium term channel. However, as it quickly formed a temporary low there and recovered, initial bias remains neutral this week first. On the upside, firm break of 1.2052 support turned resistance will suggest that the correction from 1.2348 has completed, and larger up trend isn’t finished. Intraday bias will be turned back to the upside for 1.2188 resistance and then 1.2348 high. However, break of 1.1951 will bring deeper correction to 38.2% retracement of 1.0635 to 1.2348 at 1.1694.
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.