The Euro fluctuated and penetrated both the support & the resistance specified in yesterday’s report without being able to reach any of the suggested targets in both cases. This behavior enhances our hypothesis that we are in a wave 4 of a 5-wave decline, since its known in (The Wave Principle) that wave 4 price action appears to be random while this wave is developing, just as it is the case for wave B as well. Breaking below 1.20 on Friday has opened the door for guessing the long term targets in these areas, the question now is where are these targets? In our opinion, we believe that there is one target, one point, which stands out of the crowd, and that is 1.1211, which will be our target for the next few weeks. The importance of this level is that it is the 61.8% Fibonacci for the whole move from the historical low to the historical high. For the short term, the wave count illustrated on the chart, shows a 4-wave drop, in which yesterday’s “break” is wave 4, and we still have room for another leg down below 1.1875, in what would be wave 5. Short term support is at 1.1923, and if broken the Euro will continue its drop to 1.1825, and then 1.1754. The resistance is at 1.1975, and breaking it will give the chance for the Euro to catch a break, and rise to the important 1.2085 & 1.2148.

Support:

• 1.1923: the rising trend line from Monday’s low on hourly & intraday charts.

• 1.1825: Feb 27th 2006 low.

• 1.1754: Dec 6th 2005 low.

Resistance:

• 1.1975: important intraday level.

• 1.2085: Fibonacci 61.8% for the last drop from 1.2214.

• 1.2155: the top of the falling channel on the 4-hour chart.