The Patient EUR/USD Trade – BofAML
Research Team at BofAML, sees the possibility of EUR/USD declining in
the near term due to a head and shoulders top pattern and seasonal
headwinds.
Key Quotes
“Such a decline,
in our view, would be viewed as an opportunity to go long in
anticipation of a resumption of the uptrend that began when price closed
at a 15 month closing high ending March 2015. We like buying EUR/USD on
a decline into the green shaded area at about 1.1118. We also point out
that the 12 month moving average is at 1.1024 and that aligns with the
daily 100% Fibonacci top target. A decline to his level cannot be ruled
out. We recommend a stop with a close below 1.10. Initial targets
include 1.1465 and 1.1525.
The short term head and shoulders top
pattern was confirmed on Friday when price closed below the neckline at
1.1270. Today price is testing the neckline as resistance which is a
common occurrence of price pattern formations. If price were to rally
and close above 1.1410 it would void the pattern.”
