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EUR/USD has made a nice recovery from the lows. Is it all over for a new fall in the world’s most popular pair?

The team at Goldman Sachs examines the wedge:

Here is their view, courtesy of eFXnews:

EUR/USD closed above the top of the pattern last Wednesday,  re-tested the break point on last Thursday and has since turned back higher again, notes Goldman Sachs.

All in all, it seems EURUSD is gradually making its way higher from a textbook ending wedge. An ending wedge/falling diagonal occurs primarily in the fifth wave of a 5-wave sequence which fits this chart’s count quite nicely,” GS clarifies.

It completes on a break through the top of the pattern and frequently precedes a sharp move higher. In this case, the wedge targets a move back to the Oct. 15th high (the top of wave 4) at 1.2888 near 38.2% retrace from the May ’14 high (1.2915),” GS projects.

Further confidence in this view, according to GS, will be given by a daily close above the 55-dma at 1.2552 where the market hasn’t seen a close above this pivot since the actual May 8 th high.

2014 levels marked for euro dollar GS opinion using technical analysis EURUSD

This technical set-up, according to GS, suggests that EUR/USD  low may already be in for the year.

It is worth highlighting that the market has based at 1.2248 right above a trendline extended across the lows since Jun. ’10 at 1.2230. Overall, the balance of signals seem to be suggesting that the drop from May ’14 is now a complete 5-wave sequence. It may now be in the initial stages of a (ABC-type) corrective process,” GS adds.

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