EUR/USD: signs of continuation higher
EUR/USD is looking more bullish after yesterday's break higher which cancelled out the possibility of a head-and-shoulders reversal pattern forming at the highs. Now a move above the 1.3409 highs would confirm a continuation higher, with a target at the R1 monthly pivot at 1.3508. The original break above the major trend-line which occurred on the 15th was a key turning point, leading to a more bullish outlook and generating an eventual upside target at 1.3950. It seems unlikely therefore that we will now see more weakness, although an extension of the sideways consolidation is possible, with a fall back down to the 1.3315 level a possibility.
Cable has fallen to support from both the 200-day MA and the R1 monthly pivot at 1.5480; the pair is also supported by an old trend-line. Despite the cluster of support lines the outlook is more bearish. The correction appears to be trying to push lower and there is no sign yet from price action that the short burst down has ended. Given the strength of the current move lower it is possible the current support levels will give way and we will get a break down although it is still too early to say. A move below 1.5420 would be a strong sign of weakness and lead to a downside target being generated at 1.5120. If the support at the current lows holds then it could rise, and a break above the 1.5550 highs would lead to a move to 1.5650 as a double-bottom unfolds.
Analysis By: Joaquin Monfort, Forex4you Analyst
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