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22 May 2013
Flash: EUR/USD, H&S continuation pattern implies downtrend resumed - JPMorgan
FXstreet.com (Barcelona) - The fall in EUR/USD from 1.3243 implies that the right shoulder top of a broader H & S continuation pattern is already in place and that the broader downtrend has been resumed, says John Normand, global head of FX at JPMorgan.
John notes: "In order to confirm the latter though, it takes a decisive break below 1.2764 (weekly neckline); such a break would at least challenge the main T-junction at 1.2436 (int. 76.4 %), which would still need to be broken to open the way for a much deeper decline to the H & S projection at 1.1860 which matches the 2010 low at 1.1876."
"Above 1.2764 though, the market keeps the door open to potentially perform another recovery (c-wave) to 1.3307 (weekly trend channel) and to 1.3483 (minor 76.4 %) at best" John added.
John notes: "In order to confirm the latter though, it takes a decisive break below 1.2764 (weekly neckline); such a break would at least challenge the main T-junction at 1.2436 (int. 76.4 %), which would still need to be broken to open the way for a much deeper decline to the H & S projection at 1.1860 which matches the 2010 low at 1.1876."
"Above 1.2764 though, the market keeps the door open to potentially perform another recovery (c-wave) to 1.3307 (weekly trend channel) and to 1.3483 (minor 76.4 %) at best" John added.