The Euro traded violently yesterday, breaking both the support & resistance we specified in yesterday’s report without reaching any of the targets in both cases. These “nervous” moves are definitely a cause of frustration for us, we hope for an end of such price activity soon, since they mean nothing technically. Looking at the daily chart, we can see signs of a reversal, on top of which is the (Inverted Hammer) pattern, which appears twice. Last week, we suggested a wave count with 5 complete waves up from 1.1875. And as we reach Fibonacci 50% for this massive move at 1.2604, we should not neglect the possibility that the correction might me over after reaching such an important target. And with the inverted hammer patter, the possibilities that the drop from 1.3332 is over, have became higher. Short term support is at 1.2667, and we believe a break here will indicate that the drop is far from over, and that the Euro will sink below Tuesday’s low. In this case the suggested targets will be the same as yesterday: 1.2550 first, then the all important 1.2432. On the other hand, yesterday’s trading proved the importance 1.2724, and this will be our resistance of the day. If broken, the Euro will jump to important Fibonacci levels at 1.2871 & 1.2959.

Support:

• 1.2667: the rising trend line from Tuesday’ low on the hourly chart.

• 1.2550: the support area containing Jul 7th & 12th lows.

• 1.2432: Fibonacci 61.8% for the whole rise from 1.1875 to 1.3332.

Resistance:

• 1.2724: Fibonacci 38.2% for the drop from 1.2920.

• 1.2871: Fibonacci 38.2% level for the drop from the 3-month high of 1.3332.

• 1.2959: Fibonacci 50% level for the drop from the 3-month high of 1.3332.