Our call for a new leg lower in Euro beginning at 1.3579 on 11/19 was squarely negated last night; we closed shorts. The retracement of the 1.38-1.33 decline is now approaching the 61.8% level at 1.3636 but based on the nature of the rally from 1.33 we still view this as just a correction. Within this choppy wave-(2) rally it appears that an impulsive wave-c is nearing completion. Channel resistance and the 61.8% Fibo align at 1.3636 which represent terminal resistance for this up move. With higher highs and only momentum divergences offering a sign of weakness, a downside move is needed to confirm this correction call. A break of the support zone at 1.3558/1.3490 will promote further weakness to channel support at 1.3450. Levels: Support – 1.3487/77, 1.3433, 1.3419 Resistance – 1.3540, 1.3560, 1.3579
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Nomura