EUR/USD potential leg lower ahead – Commerzbank

Karen Jones, Head of FICC Technical Analysis at Commerzbank, noted the probability of a false break in spot and the likeliness of a correction lower.

Key Quotes

“EUR/USD’s minor breach of 1.1462 2 year resistance line is increasingly looking like a false break: The new high at 1.1490 has been accompanied by a divergence of the daily RSI. This together with a 13 count and a TD resistance of 1.1521 all point to extreme caution and we suspect that it will slide lower. Nearby support is provided by the short-term uptrend at 1.1306 and the high from mid June at 1.1296. Failure here will trigger losses to the more important 1.1110 end of May low”.

“A weekly close above 1.1462 sees the market break higher from its long term range. Above 1.1462 will target 1.1616, the May 2016 high and then 1.1713/36 the August 2015 high and long term Fibo”.