Draghi dragged the euro down, but it didn’t go too far. Nevertheless, it is now approaching an interesting technical level and so is GBP/AUD. Here is the view from SocGen:
Here is their view, courtesy of eFXnews:
Having broken below the flag formation, EUR/USD retested last March lows and it continues to sustain below 20 week MA and more importantly below a multiyear descending channel limit at 1.1060/85, notes SocGen.
“It is noteworthy that this level also corresponds to the right shoulder of a Head & Shoulders pattern. Weekly MACD indicator is still languishing in negative territory which suggests possibility to continue the downtrend.Thus, 1.1060/85 remains a key resistance and will decide if a larger rebound takes shape,” SocGen adds.
“If we drop down to daily chart, the pair is undergoing a choppy down move within a mildly descending channel. Channel limit at 1.10 is an immediate resistance.
A clear break below December lows of 1.08 will indicate possibility to test 1.0650 and even the neckline of the aforementioned pattern at 1.0570/1.05, SocGen argues.
Turning to GBP/AUD, SocGen notes that after testing the lower limit of a multiyear channel (2.00), GBP/AUD has showed some signs of a recovery.
“At 2.00, it has also completed the 23.6% retracement from 2013 lows. Monthly RSI is hitting a graphical support highlighting 2.00 as a key level. Formation of a weekly bullish engulfing pattern at that level gives further credence to the support.
On daily chart, recent consolidation appears to be tracing a probable inverted H&S with neckline at 2.10. With daily indicator at support, a recovery is more likely initially towards 2.10.
A break above will lead to extension in up move towards 2.14/2.17, the 61.8% retracement from August highs,” SocGen projects.
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