The Euro did not decisively break the support or the resistance specified in yesterday’s report: it stopped 4 pips above the resistance specified in the report, and then found a bottom only 2 pips below the report’s support. The price topped at 1.2720 on Friday, in what turned out to be the most serious test of the top of the rising channel on the hourly chart. The drop which followed the week’s open, raised the possibilities that we could be before an important turning point at the channel top, especially after dropping from Friday’s high 150 pips so far. As we said in our last report: “We will not be able to escape the fact that a break here will be a very positive signal for both the short & medium terms. But, if we keep trading below (or around) it, we could be facing a turning point which will probably lead to a drop of hundreds of points”, and we still stand by this view! Short term support is at 1.2552, and once we break it, we will start drifting away from the channel top, and will target 1.2442, and may be 1.2393. The resistance is at 1.2601, and if broken, the negative outlook we have been praising will get a “shock”, and the Euro will be on the way to 1.2737, and may be 1.2801.

Support:

• 1.2552: Wednesday’s low.

• 1.2442: May 18th high.

• 1.2393: June 25th high.

Resistance:

• 1.2601: the falling trend line from Friday’s top on hourly chart.

• 1.2737: May 12th high.

• 1.2801: May 11th high.