BAML love the head-and-shoulders pattern in EUR/USD

While the world watches the euro

Bank of America Merrill Lynch FX Strategy Research maintains its bearish EUR/USD outlook, noting that in October the beach/to the right shoulder of the distribution suggests EUR/USD should decrease 1.1320.

«The range of ventilation has also broken the neckline of a larger head and shoulders top, w confirming spot could go down. Note the mm-to-200-day SMA is rising towards the 1.1320 level of the target,» BofAML projects.

«Technically, we prefer to sell intraday rallies until the fall of the resistance of the lines and would continue to carry a short position for the downtrend in progress.

Soon, the trend line resistance and the 50d SMA is sloping lower, adding to the resistance in the 1.17-1.18 area and sweetening, the risk/reward for new shorts. We expect that these techniques and resistance lines to hold to stay down,» BofAML advises.

In line with this point of view, BofAML maintains a short EUR/USD* position 1.1891 targeting 1.15.

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