22 AUG 2013 12:10 EDT
By eFXnews.com
The break out of Wednesday’s EUR/USD inside day is likely to determine the trend for the next few days, projects Commerzbank.
"Since it is to the downside and because we see negative divergence on the daily RSI, we believe that another interim top could now be in place at this week’s 1.3453 high," CB argues.
Confirmation of this, according to CB, would be a drop through the steep two month support line at 1.3290 and a fall through Tuesday’s 1.3323 low, but only a drop through the next lower 1.3208/1.3188 support area will mean that a significant top has been made.
To negate this immediate bearish view, CB thinks that a a rise above the 1.3427 Wednesday high would be needed.
"In this case, Tuesday’s 1.3453 peak should be overcome with the 1.3500/20 region then being reached. It consists of the minor psychological level and 13th February high. This is regarded as the last defence for the 1.3711 February high. We do not favour such a strong rise, though, and believe that the currency pair has already topped out," CB adds.
In line with this view, CB enters into a technical tactical short EUR/USD at market (1.3340) with a stop at 1.3455, and a target at 1.2800.
"Since it is to the downside and because we see negative divergence on the daily RSI, we believe that another interim top could now be in place at this week’s 1.3453 high," CB argues.
Confirmation of this, according to CB, would be a drop through the steep two month support line at 1.3290 and a fall through Tuesday’s 1.3323 low, but only a drop through the next lower 1.3208/1.3188 support area will mean that a significant top has been made.
To negate this immediate bearish view, CB thinks that a a rise above the 1.3427 Wednesday high would be needed.
"In this case, Tuesday’s 1.3453 peak should be overcome with the 1.3500/20 region then being reached. It consists of the minor psychological level and 13th February high. This is regarded as the last defence for the 1.3711 February high. We do not favour such a strong rise, though, and believe that the currency pair has already topped out," CB adds.
In line with this view, CB enters into a technical tactical short EUR/USD at market (1.3340) with a stop at 1.3455, and a target at 1.2800.
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