9 Jul 2013
Flash: EUR/USD, make-or-break run to 1.2453/36? - JPMorgan
FXstreet.com (Barcelona) - The EUR/USD looks vulnerable to further downside, with only one good support zone between 1.2792 and 1.2746 left, notes Niall O'Connor, Currency Strategist at JP Morgan.
In view of O'Connor, "the massive sell-off provided strong support for our bear view which would receive its final confirmation via breaks below 1.2792/46 (weekly neckline/2013 low)." Such break, according to O'Connor, "would call for a minimum decline to 1.2453/36 (C = A/76.4 %) which can be seen as the ultimate Make-or-Break-point for the EUR on big scale."
O'Connor believes that a close and hold below the latter would deliver "striking evidence that we are no longer dealing with the completing down-leg (wave c,) of a broader countertrend decline but most likely with a 3rd wave impulse with a projected target at 1.1857 (wave 1 x 1.618) which matches the 1.1876 low of 2010 and comes close to the H & S projection around 1.1800."
O'Connor, despite the outright bear views, underlines a tricky issue on his technical study, saying that "we are missing a 2nd wave rebound within this broader downswing downswing which could be launched any time but most likely from a crucial support like 1.2792/46." If this 2nd wave rebound develops, in view of O'Connor, "it usually retraces 76.4 % of the preceding wave 1 down which currently cuts in at 1.3274." But first, to receive confirmation, "it would take a decisive break above 1.2978" O'Connor said.
In view of O'Connor, "the massive sell-off provided strong support for our bear view which would receive its final confirmation via breaks below 1.2792/46 (weekly neckline/2013 low)." Such break, according to O'Connor, "would call for a minimum decline to 1.2453/36 (C = A/76.4 %) which can be seen as the ultimate Make-or-Break-point for the EUR on big scale."
O'Connor believes that a close and hold below the latter would deliver "striking evidence that we are no longer dealing with the completing down-leg (wave c,) of a broader countertrend decline but most likely with a 3rd wave impulse with a projected target at 1.1857 (wave 1 x 1.618) which matches the 1.1876 low of 2010 and comes close to the H & S projection around 1.1800."
O'Connor, despite the outright bear views, underlines a tricky issue on his technical study, saying that "we are missing a 2nd wave rebound within this broader downswing downswing which could be launched any time but most likely from a crucial support like 1.2792/46." If this 2nd wave rebound develops, in view of O'Connor, "it usually retraces 76.4 % of the preceding wave 1 down which currently cuts in at 1.3274." But first, to receive confirmation, "it would take a decisive break above 1.2978" O'Connor said.