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EUR/USD fell to the lowest levels in a month but managed to recover.   What’s next?

Here is their view, courtesy of eFXnews:

On August 31,  Bank of America Merrill Lynch FX Strategy Research Research opened a  short EUR/USD spot trade from 1.1891 on that ground fundamentals, quant and technicals argued for a decline.

“EUR/USD has traded around our entry point but has yet to decline to confirm our signals. Two more bearish technical signals have occurred and a small unconfirmed head and shoulders top pattern has developed,” BofAML notes.

Overall,  BofAML outlines 3 technical bearish signals for EUR/USD:

1-  The September 8th high signaled a TD Sequential 13 sell signal with a stop level of 1.2169.

2-  The two peaked bearish price / RSI divergence is now a more technically favorable three peaked bearish divergence.

3-  Price action may have formed the right shoulder of a small head and shoulders top that has not yet been confirmed with a neckline break,” BofAML adds.

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