Despite ending higher to 1.3171, subsequent retreat indicates that a short term top is in place. Some more consolidations would be seen in near term and deeper fall cannot be ruled out. But downside is expected to be contained by 1.2816 support (38.2% retracement of 1.2255 to 1.3171 at 1.2821). An upside breakout is anticipated and break of 1.3171 will target 1.3486 key resistance, which is close to 50% retracement of 1.4939 to 1.2042 at 1.3491.
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). Such decline should have completed at 1.2042 already. Break of 1.3486 will confirm and should pave the way to 1.5 psychological level in medium term. We'd now stay bullish as long as 1.25 psychological level holds.
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. 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. Traders following our reports could have accumulated some EUR/USD long since May. We'd now patiently wait for the current rise from 1.2042 to extend back towards 1.5001.
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