Yohay Elam, of ForexCrunch.com, questions whether this currency pair's break and the current calm are for real and shares the team at SocGen's technical take on its monthly chart and what these key levels could indicate moving forward.
Was the euro/dollar break for real? And is the current calm for real?
The team at SocGen weighs in:
Here is their view, courtesy of eFXnews:
Having tested key support near 1.05/1.04 back in March, EUR/USD has embarked on a recovery and it is noteworthy that historically this channel has lent support after elongated down moves (e.g. post five year and six year downtrends in 1985 and 2000 respectively), notes SocGen.
“Current monthly close, if largely positive, would form a bullish engulfing. The rebound since March has accelerated recently after the pair broke above a triangle within which it consolidated for nearly five months,” SocGen argues.
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“EUR/USD has hit an intermittent target of 1.1680, the 38.2% retracement from last October. However, sustaining above the triangle limit of 1.1385/70, the recovery should be persistent. Monthly RSI too shows further room before it touches a resistance trend and the pair is likely to head towards 1.1810/75, the weekly channel limit and the 38.2% retracement from last year highs,” SocGen projects.
“From an Elliott standpoint, this recovery appears to be the fourth wave within a larger downtrend and still looks to be of corrective nature. Considering this, 2012 lows of 1.20/1.22 should be able to block this move,” SocGen adds.
By Yohay Elam, Founder, Writer, and Editor, ForexCrunch.com
