EUR/USD: Double Bottom; Cable: Consolidation – RBS

An interesting pattern is seen on the euro/dollar chart, with the pair trading above a double bottom line. What does this mean for the next moves for the pair?

The team at RBS also examine GBP/USD in the analysis below:

Here is their view, courtesy of eFXnews:

The EUR/USD has been trading comforably above a key long-term support level of 1.2384, being the 23.6% retracement from the 2012 impulse wave, notes RBS.

“It has also posted a low of 1.2358 and failed to break below on the second test, indicating a possibility of a double-bottom formation and a subsequent bounce back to 1.2600 onto 1.2750 and 1.2840 should the pattern materialise,” RBS projects.

“Weekly MACD is still bearish, but its histogram indicated a positive divergence with the price action, confirming the possibility of a bounce with good risk/reward, as a break below 1.2358 would cancel the view for a bounce and target 1.2043,” RBS adds.

In Cable, RBS notes that the pair found support at the 1.5606 retracement level (50% of Jan – Mar 2013 impulse wave), and there is an increasingly likely period of consolidation of marginal upside expected, as the price stays above the key support levels and oscillators suggest a pause in the downtrend is looming

“Therefore, with the caveat of a break below 1.5600 (opening 1.5424), expect the price to consolidate within 1.5600 – 1.6000 area with further big move depending on the test of 1.5600 support and oscillators developments,” RBS project.

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