So the bear flag completed and led to a sharp sell-off as suggested Wed morning. The rally since, we labeled as a correction but it is over staying its welcome in terms of price retracement. The underside of the broken bear flag is being tested this morning and an a-b-c rally has satisfied requirements. The bottom line is that prices must reject this test today in order to keep the bearish implications of the decline intact. S/t, resistance must hold at 1.3547 and a reversal back below 1.3510 is key to confirming that the a-b-c rally is complete. Further downside support surfaces at 1.3487 & 1.3463. Our call is for a failure today after Euro completes this trendline test; we expect a downtrend to resume and carry price to below 1.34 next week. Levels: Support – 1.3510, 1.3487, 1.3463 Resistance – 1.3550, 1.3579
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Nomura