Today's support and resistance levels:
S1: 116.62 R1: 117.65
S2: 115.99 R2: 118.33
S3: 115.56 R3: 118.98
Technical overview:
With the break below important support at 117.65 we were given a signal that the wave 3 ended at 120.12 and the wave 4 is developing. So, what can we expect from the ongoing wave 4? The wave 4 is correcting the wave 3 and, as the wave 3 was an extended wave, we should not be looking for a correction deeper than the 38.2% correction target, which comes in at 112.56. We normally expect the wave 4 to alternate from the wave 2, so looking at the wave 2 we can see that it was a big flat correction, which means the wave 4 will likely be a simple zig-zag correction. Zig-zag correction is made up of three waves A-B and C, where the waves A and C are in five waves and the wave B corrects the wave A and is in three waves. The decline from 120.12 can be counted in five waves, which means that the wave A has already finished or is very close to its bottom, and the wave B should take us up to at least 118.49 and likely even to 118.72, where we will find the 61.8% correction target of the wave A. Once the wave B is over, we can calculate the targets for the wave C with the first likely target coming in at 115.45.
Trading recommendation:
Our stop at 117.60 was taken out for a nice profit and we are now looking to sell EUR for the C wave down. Therefore, we will sell EUR at 118.45 with a stop at 120.15.
