BAML likes that head-and-shoulders pattern in EUR/USD

Everyone is watching the euro

Bank of America Merrill Lynch FX Strategy Research maintains its bearish EUR/USD outlook, noticing that the October range/right shoulder breakdown suggests EUR/USD should decline 1.1320.

«The range breakdown also broke the neckline of a larger head and shoulders top, w confirming spot could decline further. Note the 200d SMA is rising towards the 1.1320 target level,» BofAML projects.

«Technically we prefer to sell intraday rallies up to the declining resistance lines and would continue to carry a short position for the downtrend underway.

Soon, trend line resistance and the 50d SMA will slope lower adding to resistance in the 1.17-1.18 area and sweetening the risk/reward to new shorts. We would expect these technical resistance lines to hold to remain bearish,» BofAML advises.

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

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