The pair is now trading in a narrow flat that according to wave count is subwave B (colored magenta in the chart - started at 117.22) of impulse wave C (colored royal blue in the chart - started at 119.05). Within the corrective wave B we have subwaves A, B, and C (colored yellow in the chart), with subwave C still developing from 117.31. Since the flat is very narrow we can expect a sharp break through either to bullish or to bearish side. Bearish is preferable since we're in a downtrend. In this case we'll have subwave C (the magenta wave) in impulse wave C (the royal blue one).
The targets below will be Fibonacci expansions off 120.14-118.20-119.05, 122.71-118.20-119.05.
Supports:
- 117.11 = objective point (OP)
- 116.26 = contracted (COP)
- 115.91 = expanded objective point (XOP)
- 116.26 = contracted (COP)
- 115.91 = expanded objective point (XOP)
If the corrective wave up resumes the immediate resistances will be Fibonacci retracements of 119.05-117.22, and expansions off A and B subwaves (the yellow ones) 117.22-117.88-117.31.
Resistances:
- 117.92-97 = confluence area of .382 retracement and OP
- 118.18 = .50 ret
- 118.35-38 = .618 ret and XOP
- 118.66 = .786 ret
- 118.18 = .50 ret
- 118.35-38 = .618 ret and XOP
- 118.66 = .786 ret
Overbought/Oversold
The bigger wave is now moving down, so it's preferable to try short positions when the Detrended Oscillator gets above the zero level (5-10 pips above the current prices) or into the overbought area (20-30 pips above the current prices). Watch for entries short at the indicated Fibonacci resistances.
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