The drop from 1.0823 is either a completed A-B-C decline, is wave A of a triangle, or wave C is still underway from near 1.0140. 2 of those counts call for a push through 1.0140 but even so, weakness is expected near term in order to correct the advance from .8881. Support should be strong near .9340. This is the 61.8% of .8881-1.0080.
Let’s focus on the bigger picture. The decline from 1.0546 (2004 top) is in 3 waves. 3 waves indicate a correction, which should be fully retraced. Near term, trendline support is at .9536. A drop below there would likely lead to a test of the 5/14 low at .9293.
Longer term, the pair is headed for a test and likely a break of the 2000 high of 1.3506. A consolidation/pullback should be underway now that could potentially reach the May low at 1.2141. We’ll reiterate what we’ve mentioned in recent weeks though; shorting is dangerous because there is the possibility that the advance extends from current levels given that the larger degree trend is up.
Tell us what you think about this report: contact the strategist about the article at jsaettele@dailyfx.com
