EUR/USD dropped to as low as 1.3200 last week and the strong break of 1.3330 support indicates that whole rebound from 1.1875 is already finished at 1.4281. Initial bias remains on the downside this week for 100% projection of 1.4281 to 1.3447 from 1.3785 at 1.2951. On the upside, above 1.3386 minor resistance will turn intraday bias neutral and bring consolidations. But break of 1.3784 resistance is needed to indicate that fall from 1.4281 is finished. Otherwise, outlook will stay bearish.
In the bigger picture, the break of 1.3330 resistance turned support indicates that whole medium term rally from 1.1875 is possibly finished at 1.4281 already after failing below falling trend line resistance from 1.6039. More importantly, the development suggests that whole correction from 1.6039 (2008 high) is still in progress. Such correction might develop into a falling triangle pattern, with the fifth leg just started at 1.4281. In other words, decline from 1.4281 could now head towards another low below 1.1875. In any case, we'll stay bearish as long as 1.3784 resistance holds.
In the long term picture, considering the five wave impulsive structure of the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, firstly, we'd expect strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and 1.1639 to contain downside. Secondly, we'd expect another high above 1.6039 eventually, after correction from 1.6039 is confirmed to be finished.
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