FXStreet (Bali) - The newly established EUR bear trend risks its first countertrend rally, notes Thomas Anthonj, FX Strategist at JP Morgan.

Key Quotes

"Prospects of having already completed the first bear market impulse in EUR/USD close to key-support between 1.3477 (2014 low) and 1.3454/09 (weekly/monthly trend) are not too bad, which implies that a broader 2nd or B-wave rally to 1.3877 (minor 76.4 %) could be looming as long as 1.3409 is not taken out. For such a rebound to unfold and in order to confirm the wave 1 or wave A low a 1.3503 it however takes a break above 1.3668/76 (200 DMA/pivot)."

"The 1.3877 handle would then offer a perfect risk-reward to establish strategic EUR short positions. A decisive break above the latter would re-open extended recovery potential to the big T-junction at 1.4259 (76.4 % on higher scale) though, whereas a break and weekly close below 1.3409 would call for a straight extension towards former lows at 1.3295 (Nov. 13) and at 1.3104 (Sept. 13)."

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