EUR/USD Weekly Outlook
EUR/USD's rebound from 1.3033 was a bit stronger than expected and mixed up the outlook for a while. But Friday's sharp decline cleared the picture. Recovery from 1.3033 should be a corrective only and is finished and decline from 1.3385 is set to resume this week. Break of 1.3033 will confirm this bearish case. Further break of 1.3003 support will confirm resumption of whole decline from 1.3486 and should target 100% projection of 1.3486 to 1.3003 from 1.3385 at 1.2902 next. More importantly, this should also confirm that rebound from 1.2625 has finished at 1.3486 and larger decline from 1.4939 is resuming for another low. We'll favor this bearish case as long as 1.3212 resistance holds.
In the bigger picture, price actions from 1.6039 (2008 high) are treated as a long term consolidation pattern and there is no clear indication of completion yet. That is, price actions could remain corrective and relatively unpredictable. The falling leg from 1.4939 is not finished yet and break of 1.2625 should pave the way to 1.1875 low. On the upside, we'd prefer to see sustained trading above 55 weeks EMA (now 1.3492) to indicate the start of another rising leg inside the pattern.
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 we'd expect range trading to continue for some time between 1.1639 and 1.6039. The range sounds a bit uselessly large but yes, it's that large. For long term traders, anywhere below 76.4% retracement of 1.1639 to 1.6039 at 1.2677 could be treated as a buy zone while above 23.6% retracement at 1.5001 is a sell zone, until there is clear indication of breakout.