EUR/USD bounce looks to be capped at 1.3341/79 within the intact downtrend, notes JP Morgan.
“The broader down-rotation remains intact but faces an increased bounce risk above 1.3104/01 (pivot/weekly Ichimoku-lagging). Only below the latter we’d see fresh down-potential to 1.2916/08 (weekly trend/Fib.-projection),” JPM projects.
“Given the extent of the latest down-cycle from 1.3701 in EUR/USD we are confident of dealing with an internal 3rd wave decline which could end at 1.3104/01 or at 1.2916/08. One of these support clusters will most likely provide the launch base for an internal 4th wave recovery,” JPM clarifies.
Such a temporary bounce (minor wave 4), according to JPM , would however look fairly limited to 1.3341/79 (minor 38.2 %/daily trend) where a fresh selling opportunity would arise, JPM advises.
“Only above the latter we’d see extended recovery potential to 1.3642 (200 DMA) and to 1.3701/86 (pivot/int. 76.4 %),” JPM adds.
