By: Tradehits.com
EUR/USD's rebound from 1.3476 extended higher last week and broke the near term falling channel. Initial bias remains on the upside this week for 1.3739 resistance. Break will confirm that whole pull back from 1.3892 has completed at 1.3476 already. In such case, the larger rally would be resuming for another high above 1.3892. On the downside, below 1.3561 minor support will turn bias back to the downside for 1.3476 low and 38.2% retracement of 1.2755 to 1.3892 at 1.3458.
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.