There can be little doubt that the long term trend in EUR/USD is bullish, as can be seen on the attached monthly chart. The top at 1.60 precipitated a 3-wave reversal to 1.1865, and of course the question now is, what happens next in the medium/long-term? I see three main possibilities:

  1. The bull market was reinstated at 1.1865 and the next significant move should be higher! That means, Fibo retracement levels become very important and we are currently sitting at the 61.8% retracement of 1.1865/1.4940, which is at 1.3040.
  2. The bull market is back in control but lacking momentum, therefore we get a deeper retracement to the bullish trendline near 1.2500
  3. The bearish consolidation isn’t done with yet and we see a full retracement to 1.1865.

As these are long term charts, we can wait for clear daily signals before deciding which scenario is most likely.