13 May 2014
EUR/USD: Looking for a break of 1.3993 or 1.3789/75 - JPMorgan
FXStreet (Bali) - John Normand and Thomas Anthonj, FX Strategists at JPMorgan, are looking for a range breakout between 1.3993 (pivot) and 1.3789/75 in EUR/USD to define the next directional bias, although they note that the break of 1.3967/69 last week was a bullish technical event shifting risk to the upside.
Key Quotes
Given the latest break above key-pivotal resistance at 1.3967/69 the odds have shifted towards another extension higher into the next lines of resistance at 1.4101 (monthly Ichimoku-lagging) and at 1.4259/83 (int. 76.4 %/pivot).
Only a break above weekly trend line resistance at 1.4524 would constitute another scale jump in favor of another extension to massive resistance between 1.4944 (2011 high) and 1.5057/1.5147 (76.4 %/2009 high).
Assuming that we are dealing with the final stage of a broad countertrend rally launched at 1.2042 in mid 2012 though, we have to stay on alert for reversal signs like a break below 1.3789 (daily trend) or two consecutive lower daily closes (10pm CET) of the red lagging line below the cloud (at 1.3672 today).
Such a break would also break the row of higher lows at 1.3673 which would open the way for a test of the last major bottom at 1.3477 and of 1.3368 (weekly trend). Breaks below these supports would confirm the reversal of the almost 2 year long countertrend rally.
In the short-run we are looking for a range breakout between 1.3993 (pivot) and 1.3789/75 (daily trend/last intra-day low) as such a breakout would provide early indications whether the countertrend rally is going to be extended to 1.4101 and 1.4259/83 (76.4 % on big scale/pivot) or whether the first crucial support cluster at 1.3674/73/72 (daily trend/April low/daily Ichimoku-lagging) is going to be tested next.
A break below the latter and below 1.3619 (200 DMA) would then challenge this years low at 1.3477 which if taken out would break the row of higher lows on big scale and thus constitute a game change. Only above 1.3993 would temporarily put the odds in favor of the EUR bulls and a limited extension higher
Key Quotes
Given the latest break above key-pivotal resistance at 1.3967/69 the odds have shifted towards another extension higher into the next lines of resistance at 1.4101 (monthly Ichimoku-lagging) and at 1.4259/83 (int. 76.4 %/pivot).
Only a break above weekly trend line resistance at 1.4524 would constitute another scale jump in favor of another extension to massive resistance between 1.4944 (2011 high) and 1.5057/1.5147 (76.4 %/2009 high).
Assuming that we are dealing with the final stage of a broad countertrend rally launched at 1.2042 in mid 2012 though, we have to stay on alert for reversal signs like a break below 1.3789 (daily trend) or two consecutive lower daily closes (10pm CET) of the red lagging line below the cloud (at 1.3672 today).
Such a break would also break the row of higher lows at 1.3673 which would open the way for a test of the last major bottom at 1.3477 and of 1.3368 (weekly trend). Breaks below these supports would confirm the reversal of the almost 2 year long countertrend rally.
In the short-run we are looking for a range breakout between 1.3993 (pivot) and 1.3789/75 (daily trend/last intra-day low) as such a breakout would provide early indications whether the countertrend rally is going to be extended to 1.4101 and 1.4259/83 (76.4 % on big scale/pivot) or whether the first crucial support cluster at 1.3674/73/72 (daily trend/April low/daily Ichimoku-lagging) is going to be tested next.
A break below the latter and below 1.3619 (200 DMA) would then challenge this years low at 1.3477 which if taken out would break the row of higher lows on big scale and thus constitute a game change. Only above 1.3993 would temporarily put the odds in favor of the EUR bulls and a limited extension higher