EUR/USD rebounded strongly after initial dip to 1.2969 last week. While 1.3447 resistance is still intact, broad based weakness in dollar is making the bearish view in EUR/USD vulnerable. In particular, we must consider that dollar index has already taken out corresponding support level of 79.46. In any case, initial bias remains on the upside this week for further rise. Break of 1.3447 resistance will indicate that decline from 1.4281 is completed with three waves downside to 1.2969 already, just missing 100% projection of 1.4281 to 1.3447 from 1.3785 at 1.2951. In such case, stronger rise should be seen to 1.3785 resistance first and then 1.4281. On the downside, below 1.3247 minor support will turn intraday bias neutral first. But we won't turn bearish in EUR/USD again before a break of 1.2969 support.
In the bigger picture, the three wave structure of the fall from 1.4281 to 1.2969 argue that it's merely a correction only. Also, it raises the possibility that whole rise from 1.1875 is indeed impulsive in nature, with a small fourth wave from 1.4150 to 1.3733. Break of 1.3785 resistance will bolster the bullish case that rise from 1.1875 is resuming for another high above 1.4281 and revive the case that medium term correction from 1.6039 is already finished at 1.1875. On the downside, a break below 1.2969 again will in turn solidify the case that correction from 1.6039 is still in progress for another low below 1.1875 before completion.
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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