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Oct 14 - 10:55 AM

EUR/USD: Chart: Euro In Perfect Downtrend Channel; What's The Trade? - BofA

By eFXdata  —  Oct 14 - 09:34 AM

Bank of America Global Research discusses EUR/USD technical outlook and highlights a downtrend channel on the daily chart. 

"Price channels develop when markets trend. Channel lines estimate support and resistance for price as places to add or trim a core position. Euro formed an excellent example of a downtrend channel this year. Prices have been faded at lower highs (red line) and supported at lower lows (green line). YE22 lines are lower at .9500-.9000," BofA notes. 

"A trend-following characteristic of a technical approach trades with trend until price forms a technical bottom pattern complimented by systematic signals and/or price break-outs (of a channel). The markets' reaction to higher US inflation data resulted in a bullish reversal day for the euro. In the short term, the top of the channel will probably be tested again, or near parity, as part of a relief rally. Trend rules say to fade this. However, a breakout above the channel will indicate long-term momentum is mean reverting to support a larger rally," BofA adds. 

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Source:
BofA Global Research

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