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13 Apr 2015
EUR/USD poised to break down to new cycle lows - TDS
FXStreet (Bali) - EURUSD’s stabilization over the past three weeks appears poised to break down and give way to new cycle lows shortly, notes Shaun Osborne, Chief FX Strategist at TD Securities.
Key Quotes
"EURUSD’s stabilization over the past three weeks appears poised to break down and give way to new cycle lows shortly. EURUSD gains have been consistently capped at 1.1045/50 since the March 18th pop higher, a little below the 1.11 level (January low) that we expected to be pivotal for the EUR. The EUR’s failure to make progress above here (and any impression on the longer-term retracement points, below) implies that the underlying trend lower still has room to run. This week’s drop below 1.0716 (minor double top neckline trigger) indicates immediate risk to 1.0390/00. We expect the high1.06/low 1.07 area to form strong resistance to shortterm gains from here. Look to fade minor EUR rebounds."
"Heavy net selling this week draws a line under the EUR’s stabilization; negative signals on the daily chart, above, are reflected in the weekly chart, below; this week’s EUR drop forms a bearish outside range week, strongly indicating a halt to the rebound and a resumption of the longer-term ear trend. Momentum signals are aligned bearishly across a range of timeframes and although the EUR retains a heavily ‘oversold’ look, according to some oscillator studies, we take a high conviction view of the negative signals thrown out by the charts this week. The next major support downside is 1.0073 (76.4% of the 2000/2008 rally)."
Key Quotes
"EURUSD’s stabilization over the past three weeks appears poised to break down and give way to new cycle lows shortly. EURUSD gains have been consistently capped at 1.1045/50 since the March 18th pop higher, a little below the 1.11 level (January low) that we expected to be pivotal for the EUR. The EUR’s failure to make progress above here (and any impression on the longer-term retracement points, below) implies that the underlying trend lower still has room to run. This week’s drop below 1.0716 (minor double top neckline trigger) indicates immediate risk to 1.0390/00. We expect the high1.06/low 1.07 area to form strong resistance to shortterm gains from here. Look to fade minor EUR rebounds."
"Heavy net selling this week draws a line under the EUR’s stabilization; negative signals on the daily chart, above, are reflected in the weekly chart, below; this week’s EUR drop forms a bearish outside range week, strongly indicating a halt to the rebound and a resumption of the longer-term ear trend. Momentum signals are aligned bearishly across a range of timeframes and although the EUR retains a heavily ‘oversold’ look, according to some oscillator studies, we take a high conviction view of the negative signals thrown out by the charts this week. The next major support downside is 1.0073 (76.4% of the 2000/2008 rally)."