The Euro broke the support specified in yesterday’s report 1.3133, and dropped as expected, only to stop at 1.3070, without reaching the suggested target. Then (which is a lot more important), the price jumped in the post-Fed chaos to 1.3226 (7 pips below our resistance), testing the previously broken trend line, accurately (please refer to the attached chart). If it 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. Short term support is at 1.3032, which we are trading just above at the moment. If broken, the price will drop targeting the important Fibonacci level 1.2961, and if broken 1.2875. On the other hand, resistance is at 1.3158, and if broken, this pair will contradict all what we have said, and will shoot up to 1.3255, and may be 1.3347.

Support:

• 1.3032: Fibonacci 61.8% for the whole rising move from 1.2731 to Friday’s & 3-month high.

• 1.2961: Fibonacci 61.8% for the whole rising move from 1.2731 to Friday’s & 3-month high.

• 1.2875: Jul 26th low, a well known support/resistance area.

Resistance:

• 1.3158: short term 61.8% Fibonacci level.

• 1.3233: the retest level for the broken trend line.

• 1.3347: May 3rd unforgettable top.