Monthly time frame
- The "big picture" for the EURUSD from the July 2008 top is bearish (Sequence of lower highs/lows)
- There is a potential Head & Shoulder with a measured target at 0.79 although in order to achieve the measured target price has to breach the lower trend line of the channel that has been formed since the 2008 top and the trend line from the March 1985 bottom
- However last week rally could shift the shorter term trend from bearish to bullish (Central Planners now want a weaker USD)
- It is still early in the month to draw a conclusion from the monthly candlestick. Two key levels to watch are: The 10 mma = 1.0994, which hast not been reclaimed since July 2014 and R1 = 1.1213 where the EURUSD has failed 7 times since March 2015.
- Above 1.1213 we have R2 (August high) at 1.1712 and R3 at the 0.5 retracement of the decline from the May 2014 high and the neckline of the assumed Head & Shoulder in the range of 1.2227
Weekly time frame:
- From the December 6 higher low, after 8 weeks of a sideways move the EURUSD has finally breached the trend line resistance from the August peak and it has reclaimed the 50 wma (First time since June 2014). So now we have a new sequence of higher high/low, hence the weekly time frame trend is now up
- Price has failed to breach the R1 = 1.1213 at the first attempt but if the 50 wma = 1.1016 holds odds should favor a move towards R2 = 1.1442
- Weekly oscillators are aligned with higher prices ahead: The RSI(14) has a positive divergence, it has reclaimed the 50 line and it has marginally breached the August peak; The MACD has a bullish signal cross in force since December
Daily time:
- If last week break out is a thrust from a Triangle, the pattern from the December 6 higher low is not impulsive (A major bottom is not in place)
- So far we could have a Zig Zag underway with a potential impulsive wave (C)
- If this is the case the EURUSD should retest the August high (R3)
- Last week the EURUSD has reclaimed the 200 dma. Going forward the 200 dma must hold in order maintain the short-term bullish pattern
- Daily oscillators are bullish. Maybe the overbought RSI(5) could result in some consolidation activity
