EUR/USD continued to engage in choppy sideway consolidation between 1.2329 and 1.3290 last week. As discussed before, with EUR/USD just missed 38.2% retracement of 1.4867 to 1.2329 at 1.3299, it’s believed that fall from 1.4867 has completed. Consolidation from 1.2329 is still in progress and is probably developing into triangle pattern. Nevertheless, in any case, firstly, as long as 1.2329 low holds, such consolidation could extend further. Secondly, in case of another rise, upside should be limited below 1.3768 cluster resistance. And more importantly, the path of the consolidation will remain unpredictable.

In the bigger picture, as discussed before, the strength of the fall from 1.6038 reinforces the case that whole decline from 1.6038 is developing into a five wave impulsive fall. The completed decline from 1.4867 to 1.2329 might represent the third wave decline in the five wave sequence. Consolidation from 1.2329 might represent the fourth wave consolidation. Hence, another decline is still expected before making a medium term bottom. Below 1.2329 will target next long term fibonacci level of 50% retracement of 0.8223 to 1.6038 at 1.2131 or even further to 1.1639 key medium term support. On the upside, sustained break of 1.3768 cluster resistance (38.2% retracement of 1.6038 to 1.2329 at 1.3746) is needed to invalidate this view and indicate that whole decline from 1.6038 has made a medium term bottom.

In the long term picture, 1.6038 is no doubt an important long term top and the long term trend has definitely changed. The question is how far such down trend can go. Would EUR/USD retest historical low of 0.8223? There is no clear answer for the moment. Nevertheless, the impulsive nature of the fall from 1.6038 suggests that the development after EUR/USD makes a medium term bottom will be corrective in nature and then be followed by at least one more medium term decline before completing the whole long term down trend.