Both EUR/USD and USD/JPY are experiencing interesting patterns on their charts.
Taking a technical look at both major pairs, the team at Nomura see more potential for the US dollar.
Here is their view, courtesy of eFXnews:
The down channel in EUR/USD is still in force from 1.26 and now there is strong resistance at 1.1864, notes Nomura.
“Another convincing break of 1.1754 can set the stage for a fresh drop to 1.1713/1640 which are levels from the monthly chart that represent the next support zone,” Nomura projects.
“From a wave perspective, if wave-4 is complete as labeled, then wave-5 lower is underway and can sport another impulse lower. For today initial resistance is right here at 1.1864; support is 1.1713,” Nomura adds.
In USD/JPY, Nomura favored a flat rather than a triangle to explain this wave-4 consolidation.
“The drop below 118 promotes the alternate idea and we are now shifting to the bull triangle interpretation. The ideal target for wave-C in this coil is 116.95 but the pattern remains valid above 116.30/115.57,” Nomura argues.
“The reason we view this is a bullish consolidation is because of the choppy declines (from 121.85 and 120.85) against the trend that are the hallmark of corrections. S/t, support is 116.30/115.57,” Nomura clarifies.
“Resistance is 117.74 and then 118.85; above those levels can signal a wave-D rally to 119.77,” Nomura projects.
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