Technical outlook:

EURUSD dropped to 1.2108 lows yesterday before finding support again. It is quite possible that the European currency has managed to carve a higher low and bulls are now inclined to extend the counter trend rally towards 1.2250/70 in the near term. The single currency pair is seen to be trading at around 1.2163 levels at this point in writing and is expected to continue pushing higher towards 1.2250/70 levels before resuming lower again.

Immediate resistance remains fixed at 1.2350 mark, while interim support comes in around 1.2053 levels respectively. The recent boundary which is being worked upon is between 1.2350 and 1.2053 and the fibonacci 0.618 retracement is seen towards 1.2250 levels respectively (not shown here). High probability remains for a bearish reversal, if prices manage to reach through 1.2250/70 zone. Bears are expected to be back in control until prices stay below 1.2350 highs.

On the flip side, even if prices break above 1.2350 in the near term, upside remains limited and a sharp bearish reversal could be underway. The larger wave structure also remains constructive for bears since the entire rally between 1.0636 and 1.2350 seems to be complete. Probability remains high for a drop through 1.1250/1.1300 levels, which is fibonacci 0.618 retracement for the above rally.

Trading plan:

Remain short, add more @ 1.2250/70, stop @ 1.2500, target is open.

Good luck!