The Canadian dollar has experienced sharper moves than it normally does, and an interesting technical development is seen by Goldman Sachs.
They also weigh in on the heavy USD/JPY pair:
Here is their view, courtesy of eFXnews:
As USD/CAD has broken below the neckline of a double top,1.2352 should hold as resistance, says Goldman Sachs.
“The double top has a downside target of ~1.19 which happens to be very close to the trend across the lows since Sep. 19th (currently 1.1902). The first targeted support should really be 1.1992 (38.2% retrace of the July/Mar. rally),†GS projects.
“Although the market has been sticky around the 100-dma (1.2214), ideally want to see anything below 1.2352 as an opportunity to re-establish bearish exposure,†GS advises.
Bigger picture, GS thinks that there’s good reason to believe that the high is in.
“The market never quite made it high enough to test the late-’08/Mar. ‘09 highs; 1.3007-65. The high just marginally overshot a 1.618 extension target taken from the Jul. ‘11 low at 1.2655. This implies that wave 5 of a 5-wave sequence (which began at the ‘11 low) could already be complete. This also suggests that USDCAD may be about to enter a multi-month corrective sequence (a very large ABC),†GS clarifies.
Moving to USD/JPY, GS now seriously considering whether everything since Mar. 10th is a larger ABC decline
“If this is true, the C leg should be targeting somewhere near ~117.14. The fact that oscillators have posted a series of three lowered range highs since February is indicative of a heavier setup,†GS argues.
“The next important support level to focus on is 61.8% retrace from Feb. 2 nd at 118.71. A daily close below there opens downside risks to 117.14,†GS projects.
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