The bear flag outlined Wednesday did lead to a significant break of 1.2965 only to leave a bear trap. The subsequent rally back through key support and back into the bear flag raises the case that a right-shoulder of a head & shoulders top could be underway. The target for the top of the shoulder is 1.3160/80; a wave 4 target and symmetry level for the bearish top. (ch1) S/t, prices are attempting a bullish break of the February downtrend at 1.3070, next resistance above are the two highs near 1.3150. Beyond 1.3150, confirms that a more pronounced rally/correction higher is underway. We are expecting a 5-wave move to unfold to complete an A-B-C correction with a 1.618 extension target of 1.3183. This corrective pattern is know as an expanded flat, Wave A of the pattern was actually a smaller version of this expected correction. (ch3) Levels: Support – 1.3032, 1.3000, 1.2965 Resistance – 1.3070, 1.3150, 1.3183.
Nomura