The euro and the pound have made nice gains against the greenback. Can this continue a bit more?
The team at Goldman Sachs analyzes the moves on the charts and sets the next targets:
Here is their view, courtesy of eFXnews:
Going into the end of last week, EURUSD has squeezed from its lows by attaining a daily close above the 21-dma, notes Goldman Sachs.
“This is the first daily close above the 21-dma since the interim high from Dec. 16th. In addition, it’s broken the downtrend from that same December high and shown positive oscillator divergence since early-January,” GS adds.
“Overall, it looks as though the market may correct a little further. If viewed as a possible ABC from the Jan. 26th lows, EURUSD could end up retracing to ~1.1661-1.1704 (near 38.2% from the Dec. 16th high). It will also be important to watch if the break above the 21-dma is held into another daily close; this now comes in at ~1.1389,” GS projects.
Bigger picture, GS argues that from a multi-month perspective, 1.1237 could be quite important.
“This pivot, which is 61.8% retrace of the entire ’00/’08 rally, ultimately satisfied the minimum target for an ABC that started in ’08. In other words, from an Elliott wave perspective its plausible (not certain however) that a low could already be in place,” GS adds.
“It seems until the psychologically relevant 1.10 level is broken, it’s best to keep an eye out for any further sign of a correction or base developing,” GS argues.
Turning to Cable, GS notes that it has squeezed more than EURUSD.
“It’s now broken its downtrend from the Jul. ’14 high and started to accelerate higher On the daily chart, there appears to be a reverse H&S bottom which has a projection target up at ~1.5477,” GS projects.
“It’s clear from these signals that 1.50 support is likely to hold for longer than initially anticipated. There’s been material damage to the trend and it seems there’s potential to squeeze a little further from current level,” GS adds.
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