By: Tradehits.com
EUR/USD recovered from 1.3476 last week but as mentioned before, it's still kept inside a near term falling channel, and well below 1.3739 resistance. Deeper decline is still expected in near term to 38.2% retracement of 1.2755 to 1.3892 at 1.3458. Break will target 50% retracement at 1.3324. Nonetheless, break of 1.3739 resistance will indicate that the choppy fall from 1.3892 has already finished and will turn near term outlook bullish for another high above 1.3892 to extend the larger rally.
In the bigger picture, overall price actions from 1.6039 is viewed as a corrective pattern .The choppy rise from 1.2042 is viewed as a leg inside the pattern. Upside momentum is rather unconvincing with weekly MACD crossing below signal line. But it's too early to call for a top at 1.3892. Nonetheless, even in case of another rally, upside potential should be limited and strong resistance would be seen between 1.4 psychological level and 100% projection of 1.2042 to 1.3710 from 1.2755 at 1.4423. Decisive break of 1.2755, however, will confirm medium term reversal and target a new low below 1.2042.
In the long term picture, EUR/USD turned into a long term consolidation pattern since reaching 1.6039 in 2008. Such consolidation is still in progress. And break of 1.2042 will likely pave the way to 61.8% retracement of 0.8223 to 1.6039 at 1.1209. Before that, EUR/USD would continue to engage in sideway trading between 1.1875 and 1.5143 in medium term.
This analysis was provided by TradeHits, a top binary options broker.