EUR/USD's rebound was limited below 1.2747 resistance last week and subsequent sharp decline sent it through 1.2287 support. The development indicates that whole decline from 1.4939 has resumed. Initial bias remains on the downside this week for 61.8% projection of 1.3282 to 1.2287 from 1.2747 at 1.2132 next. On the upside, above 1.2403 minor resistance will turn bias neutral and bring consolidations before staging another fall.

In the bigger picture, fall from 1.4939 is treated as a falling leg inside the consolidation pattern that started at 1.6039 (2008 high) and could extend to 1.1875 low and below. In that case, though, strong support is expected from 1.1639/1875 support zone to contain downside and bring rebound. After all, such consolidation would extend further inside range of 1.1639/6039 for some more time. On the upside, break of 1.2747 resistance is needed to be the first sign of reversal. Otherwise, outlook will remain bearish even in case of rebound.

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.

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