While movements on both major pairs are not that huge, the interesting technical patterns promise further action later ahead.
Here is the view from Nomura:
Here is their view, courtesy of eFXnews:
The bullish hammer candle that created a bear trap in USD/JPY has morphed into a similarly bullish morning star pattern now and promotes additional upside, notes Nomura.
“A break of 119.63 this week will clear a path to pivot and extension targets at 120.57/74. Further adding to the bullish n/t case is the 5-wave rally of the low,†Nomura projects.
“Since this was an impulse, we need at least one more impulsive rally to mark wave-C or 3.
Pullback support is 119.14 while a breakout above 119.63 will shift focus to the next pivot at 120.35,†Nomura adds.
Turning to EUR/USD, Nomura notes that Friday’s sell-off confirmed the bearish engulfing candles and this bearish pattern occurred at a key 61.8% retracement which adds to its significance as a reversal pattern.
“Now the market is declining in impulsive fashion and we expect additional downside,†Nomura argues.
“S/t, a 5-wave decline and 3-wave correction not only marked waves-1 & 2 of a new decline but also completed a head & shoulders top pattern.
The projection targets from wave-3 and the topping pattern are 1.1230 & 1.1174,†Nomura projects.
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