With thanks to the people at eFX;
- Bank of America Merrill Lynch and Nomura’s technical strategy teams are out with notes today warning of a near-term base and a correction higher in EUR/USD.
- “Since late spring, we have been EUR/USD bears. However, evidence now says that the bear trend is poised for a significant breather,” BoA argues.
- “The combination of completed five-wave declines from both early May (1.3993) and mid-October (1.2888) and proximity to long-term support at 1.2309 (200m avg), coupled with the extremes in sentiment and positioning, say the downtrend has run its course — for now,” BofA adds.
- “Indeed, in the weeks ahead, we look for a period of choppy range-trading between the 1.30/1.23 area before the long-term bear trend resumes for 1.1706 and, potentially, below,” BofA argues.
Same for Nomura, who also thinks that a “move back to 1.29/30 can mark wave- (c) of 4 or in the alternate case, a wave-(2) correction of the entire decline from 1.40.”
- Short-term, Nomura sees a move above 1.2625 critical to raise the conviction further that a larger rally is unfolding
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