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Karen Jones, analyst at Commerzbank, notes that the EUR/USD pair has seen a strong bounce higher and we have a 13 count on the weekly chart plus the weekly RSI has not confirmed the new low so there were plenty of warning signs of reversal.

Key Quotes

“It has not yet overcome initial resistance, which is offered by the 23.6% retracement at 1.1040, and we note that the intraday Elliott wave counts are negative, which for today implies a possible retest of the 1.0941/26 support.”

“Nearby resistance is the near term downtrend at 1.1145 and the 200 day ma at 1.1269, but key resistance is 1.1328/51, the 2018-2019 down channel and the 55 week ma. A weekly close above this latter level is needed to negate downside pressure. Below 1.0926 lies the 78.6% retracement at 1.0814.”

“The market will need to regain the 55 week ma and channel at 1.1328/51 to generate upside interest.”