miroslava.micunkova's picture

CEE currencies on the verge of a further decline - EURHUF and EURPLN building continuation patterns

EURHUF and EURPLN have both rallied recently after hitting multi-month lows in late May/early June. Peaking in early August, EURHUF has added 5.08% while the late August peak in EURPLN added 3.4%.  

From a long-term perspective, EURHUF has been moving in a major uptrend since July 2008. All-time traded highs occurred at 317.08 and 324.16 in March 2009 and January 2012. By connecting these two consecutive peaks we have obtained a multi-year bullish channel indicating an upside space up to 331.0 at current levels.

The clearly defined long-term uptrend suggests that the current consolidation which has settled in the 311.65-317.26 trading range may eventually break on the upside leading to initial gains towards 321.12 measured target and past 324.16 to fresh all-time traded highs. 

EURPLN on the other hand has shown a major horizontal movement with consecutively declining peaks since late May 2012. An indication that the most recent rally may extend above the 4.2463-4.2610 cap may be given by a break from a multi-month bear channel in early August this year. Presence of the 260-day MA in the 4.1715-4.1720 area raises hopes of an eventual rally resumption towards 4.2610 (2014 high) initially and February 2009-December 2011 major downtrend line now at 4.2755.