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The EUR/USD edged higher to 1.3027 last week but upside momentum was not strong. But, a further rise is expected this week as long as 1.2879 support holds.

The consolidation pattern from 1.3171 finished with 3 waves down to 1.2661. Rebound from 1.2661 should extend to the resistance zone at 1.3138/7. A crack there confirms resumption of rally from 1.2042.

A break of 1.2879 puts a damper on this Bullish POV raising the odds that another low below 1.2661 could be seen before consolidation from 1.3171 is finished.

The Big Picture: the fall from 1.4939 is treated as a falling leg inside the consolidation pattern that started at 1.6039, the Y 2008 high. This decline should have completed at 1.2042. A break of 1.3486 confirms and should show the way to the psych mark at 1.50 medium term. For now staying Bullish as long as 1.25 the psych mark holds.

The Long Term Picture: EUR/USD turned into a long term consolidation pattern when it tapped 1.6039 in Y 2008. Such consolidation is still in progress, range trading to continue for some time. For long term traders, a move anywhere below 76.4% Fibo retracement of 1.1639 to 1.6039 at 1.2677 could be treated as a buy zone while above 23.6% Fibo retracement at 1.5001 is a sell zone, until there is clear indication of breakout. those readers who accumulated some EUR/USD long since May, now patiently wait for the current rise from 1.2042 to extend back towards 1.5001.

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Linda Johnson,
Business Development Director – Private Client Group,
Heffernan Capital Management
Sales@Heffcap.com

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