The Euro broke the support specified in yesterday’s report 1.3032, and dropped as expected, reaching both suggested targets 1.2961 & 1.2875 with complete success, to move 400 pips away from last Friday’s “Jobs-report-top”. We have commented on the retest case which took place after the Fed’s statement Tuesday evening by saying: “it is a well known technical principle that such an accurate retest confirms the break it followed, and the new direction, which is down in this case. Looking at the attached chart, we can see that: 1. the rising trend line was broken decisively and 2. the price retested this line in an accurate fashion. These are obvious indication of a falling trend. Therefore, unless the price goes back up to trade above the broken trend line, we expect more downside activity.” Today, there is more to talk about technically; there is a complete 5-wave count for the rise from 1.1875, but does it mean that the uptrend is over? Also, there is not one but 2 channels on the daily chart. The first (shown in RED on the attached chart), combining the tops of the waves 1 & 3, which is already broken. The second channel
(shown in BLACK on the attached chart) combines the tops of waves 3 & 5, and although the price tried to break it, it went back to trade inside it. The bottom of the second channel is at 1.2869, that is why this will be our support for today. If broken, the horror movie will go on for the Euro, and we will drop to 1.2775 & 1.2681. The resistance is at the Asian session high 1.2917, and if broken, a short term correction will target not less than 1.2981 & not more than
1.3074.

Support:

• 1.2869: the bottom of the rising channel on the daily chart.

• 1.2775: first of the main Fibonacci retracement levels (the 38.2% level) for the whole rise from this year’s low 1.1875 to last Friday’s and 3-month high.

• 1.2681: Jul 14th low.

Resistance:

• 1.2917: Asian session top.

• 1.2981: short term 38.2% Fibonacci level.

• 1.3047: short term 61.8% Fibonacci level.