Societe Generale – In the Charts Forex

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Societe Generale Research

Today’s key points

Having achieved our advocated target of 0.7750,  EUR/GBP has been undergoing a pause. The pair has sustained above the confirmation level of the double bottom and inverted H&S at 0.75/0.7450 which remains an important support. Recently, the pair has rebounded after testing a multi month trend support (currently at 0.76) and is now closing in on January highs of 0.7750. It is noteworthy that it has completed a typical 3-year down cycle earlier and further recovery looks  on  cards  however  a  break  beyond 0.7750  will  be  needed  to  signal  a  larger  pullback towards September 2014 highs of 0.8070/0.81.

After testing intermittent resistance at 100/100.40, the Dollar Index is undergoing a short term pullback. Very short term, it has tested the triangle limit at 96/95.60 and is now approaching towards  immediate resistance at 97.45. A move below 96/95.60 will mean a test of 94.40, the 76.4% retracement of recovery since last August. Please refer to the  Chart Alert  published last week about an alternative view on the index.

USD/CAD probed the multiyear ascending channel support last week at 1.3760/1.37, where it has formed a  daily  hammer and bullish engulfing. With daily stochastic indicator near  a  trend support, a recovery looks possible. A break above 1.3910, a steeper descending trend will lead to  a pullback  initially  towards  1.4170 and even towards 1.4290/1.4330, the 61.8% retracement from January highs.