EUR/USD technical analysis from Goldman Sachs.
- EUR/USD is looking increasingly stable/constructive as weekly and monthly oscillators are crossing positively from the bottom of their multi-year range
I'm not a user of oscillators really. Not monthly charts. But, if you are, you may find this useful!
This is via the good folks over at eFX
"The low (which reached 1.0485) came close enough to satisfying a very big ABC that started at the Jul. '08 high. The month of April formed a bullish outside/engulfing pattern. The month of May has already made a new high," GS adds.
"All of this suggests that there is a strong likelihood that the market will remain stable/constructive in the near-to-medium term time horizon," GS argues.
Bigger picture, GS still belives that the decline from May '14 seems a complete 5-wave that have ended at the March'15 low.
"What should typically follow a 5-wave sequence is an ABC type reversal that retraces between 38.2% and 50% of the previous trend. In this case, 38.2% of the May '14/Mar. '15 trend comes in at 1.18; 50% is all the way up at 1.2265. The nearer, 38.2% retrace target at 1.18 seems a fair level to focus on. If/once that level has been attained, the reasonable thing to do would be to take a more neutral stance until further signal develops," GS argues.
As such, GS thinks that the next important resistance level is 1.1559 as the downtrend from July '14 comes in at 1.1559 which is now not too far from current levels.
"In short, if it is able to clear through 1.1559 with relative ease, it should further confirm that a near-term reversal is likely taking place," GS concludes.
