Because of major weekly resistance and the bearish reversal below 1.39 we have been biased to the downside in Euro and last week prices failed right where old pivot lows and the wave-C extension target aligned. This range from Jan 8 has met the requirement for an a-b-c, expanded flat correction where both bear & bull traps are suffered. With wave-(2) complete, we expect a resumption of the downtrend from 1.39. S/t, there is a small pivot zone at 1.3650 but then a vacuum of support down to 1.3580. Resistance is 1.3717/40. Ultimately we need to see a Friday close below the July uptrend (1.3668) to confirm this outlook. Conviction: Med Trade: Flat. Look to be short post wave-2 correction of initial sell-off. Levels: Support – 1.3650, 1.3580, 1.3508 Resistance – 1.3717, 1.3740, 1.3900
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Nomura