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EUR/USD: Broader downtrend established - JPMorgan

FXStreet (Bali) - JP Morgan FX Strategists see a new and broader downtrend established in EUR/USD.

Key Quotes

"Given the impulsive structures of the decline from 1.3993 and the breaks below this years low at 1.3477 as well as below weekly trend line support at 1.2922, we see a new and broader downtrend as well established."

"Looking at the inner structure of the decline we now perceive us to be performing the internal 3rd wave decline, which could stretch out to 1.2755/46, to 1.2662 (former lows) and possibly even to 1.2502 and 1.2418 (int. 76.4 %/wave 3 projection), now that 1.2908 (wave 1 x 1.618) has already been taken out."

"As pivotal support at 1.2755/46 coincides with monthly trend line support at 1.2769 though, we see a good chance that this support cluster could provide a launch base for an internal 4th wave recovery. Below, only 1.2502 (int. 76.4 %) looks strong enough to do so."

"In the short-run we are looking for the internal wave 4 rebound to unfold, which has currently a projected target at 1.3181 (minor 38.2 %) and would provide a great risk reward to bet on the missing 5th wave decline. For such a rebound to be indicated though, it would take a break above the last intra-day high at 1.2989."

"Below, we have to assume that the 3rd wave decline is incomplete in itself, which keeps strong support at 1.2769/55/46 and at 1.2502 as potential launch bases for the 4th wave recovery in focus."

"Only a decisive break above 1.3181 would start weakening the down-bias and would suggest that the A.-or Ist wave low could already be in place. Conclusively we'd have to be prepared for a broader B.-or IInd wave recovery to 1.3426 (int. 50 %) and to 1.3725 (int. 76.4 %) at a later stage from where the broader downtrend is expected to be resumed."

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