13 Jan 2015
EUR/USD downtrend intact, needs to clear 2005 low - JPMorgan
FXStreet (Bali) - The downtrend remains intact but faces an increased bounce risk above 1.1641 (2005 low), notes Thomas Anthonj, FX Strategist at JPMorgan.
Key Quotes
"The fact that EUR/USD didn’t hesitate to break below former lows at 1.2042 and at 1.1876 (2012/2010 lows) reflects the weak setup and suggests that the 2005 low at 1.1641 is going to be tested next."
"But given the obvious 5wave pattern within the decline from 1.3993 we see an increased bounce risk above the strong support cluster at 1.1673/66/41 (c = a/wave 5 projection/2005 low). It would however take a break above 1.1859/61 (pivots) to trigger a rebound to the first T-junction at 1.2046 (minor 38.2 %)."
"Only above the latter we'd see room for a stronger recovery to 1.2233 (weekly breakout line) and to the main T-junction on big scale at 1.2498 (38.2 % on higher scale)."
"A break below the 2005 low at 1.1641 would on the other hand reopen fresh down-potential to 1.1212 (61.8 % of the 20002008 rally), to 1.1091 (C = A) and possibly to 1.0072 (76.4 %) as described in more detail in this week's chart special “Euro bound for 1.10."
Key Quotes
"The fact that EUR/USD didn’t hesitate to break below former lows at 1.2042 and at 1.1876 (2012/2010 lows) reflects the weak setup and suggests that the 2005 low at 1.1641 is going to be tested next."
"But given the obvious 5wave pattern within the decline from 1.3993 we see an increased bounce risk above the strong support cluster at 1.1673/66/41 (c = a/wave 5 projection/2005 low). It would however take a break above 1.1859/61 (pivots) to trigger a rebound to the first T-junction at 1.2046 (minor 38.2 %)."
"Only above the latter we'd see room for a stronger recovery to 1.2233 (weekly breakout line) and to the main T-junction on big scale at 1.2498 (38.2 % on higher scale)."
"A break below the 2005 low at 1.1641 would on the other hand reopen fresh down-potential to 1.1212 (61.8 % of the 20002008 rally), to 1.1091 (C = A) and possibly to 1.0072 (76.4 %) as described in more detail in this week's chart special “Euro bound for 1.10."