EUR/USD: Technical Analysis
The exchange rate has broken out of the triangle formation it was in since the 15th October and it will not probably rally higher reaching the 1.44s at least. This is likely to be an 5th Elliot wave of the second leg of the zig-zag which started at the June lows, so once it has finished there may be a sharp decline. There has been a bullish breach of the cloud on the weekly Ichimoku chart but price will have to remain above the cloud for a further week or 2 for confirmation.
Taking the width of the triangle and extending it higher yields an upside target of 1.4450 which is also where the R2 monthly pivot lies, whilst channelling the Elliot wave which started at the August lows yields another objective in the 1.47s. Finally the trend-line down connecting the ’08 and n’09 highs lies at roughly 1.4600 and this would be a substantial line of resistance if met. In the short term, however, it is possible there may be a pullback to 1.4200 before further upside.
Analysis by: Forex4you.com written by Joaquin Monfort
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