EUR/USD has managed to bounce from 1.25 but can it continue recovering or is it just a correction before the a bigger fall?
The team at JP Morgan sides with the latter view stating that the recoveries are for sales and provide explanations and levels:
Here is their view, courtesy of eFXnews:
The defense of the main T-junction at 1.2502 (76.4 %) in EUR/USD opened the door for an internal 4th wave recovery to 1.2959 (int. 38.2 %), where a fresh selling opportunity would be given, argues JP Morgan.
An importunate sign to watch here, according to JPM, is the failure so far to clear first resistance at 1.2797 (monthly breakout line).
This could be an indication that the internal 3rd wave decline is not done yet, which keeps 1.2418 (wave 3 projection) and 1.2214 (weekly trend) in focus, JPM projects.
“To confirm a straight extension lower and to delay the expected 4th wave recovery it would however take a decisive break below 1.2569 (minor 76.4 %) on hourly close (i.e. below 1.2550),” JPM argues.
“Only a decisive hourly close above 1.2959 (i.e. above 1.2980) would on the other hand start weakening the prevailing down-bias in favor of a stronger recovery to 1.3246 (int. 50 %),” JPM adds.
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