EUR/USD's rebound from 1.1875 resumed late week and surged to as high as 1.2610, breaking 38.2% retracement of 1.3691 to 1.1875 at 1.2569. Initial bias remains mildly on the upside this week and further rise could still be seen. Nevertheless, note that such rise from 1.1875 is treated as a correction in medium term down trend from 1.5143 only. Hence, we'd expect strong resistance between 1.2671 resistance and medium term falling trendline (now at 1.2826) to limit upside and bring fall resumption. Below 1.2434 minor resistance will flip intraday bias back to the downside for 1.2149 support first.
In the bigger picture, fall from 1.5143 is part of the whole down trend from 2008 high of 1.6039. Such decline is expected to develop into a five wave sequence and target 100% projection of 1.6039 to 1.2329 from 1.5143 at 1.1433. We'd expect the current rebound from 1.1875, which is viewed as the fourth wave inside the five wave sequence from 1.5143, to be limited by trend line resistance (now at 1.2826) and bring one more fall. Nevertheless, sustained trading above the trend line will be the first alert that EUR/USD has bottomed earlier than we thought and will turn focus to 1.3266/3691 resistance zone.
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, we'd expect strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and 1.1639 support to contain downside and bring another long term up trend. However, note that sustained break of 1.1209 key fibonacci level will dampen this view and open up the case of a take on parity.