EUR/USD – 1.0668
EUR/USD: Wave (c) of 2 ended at 1.3993 and wave 3 of III has commenced for weakness to 1.0411 (1.236 of wave 1), then 1.0000.
The single currency found renewed buying interest at 1.0525 and has staged a strong rebound, suggesting near term upside risk remains for the rebound from 1.0493 to extend gain to 1.0740-50, however, as broad outlook remains consolidative, reckon upside would be limited and price should falter well below resistance at 1.0829, bring retreat later, below 1.0600 would bring another test of said support at 1.0525 but break there is needed to signal the rebound from 1.0493 has ended, bring another test of this level later.Looking ahead, only a drop below 1.0493-96 support would add credence to our view that the rebound from 1.0340 has ended at 1.0829 and bring further fall to indicated key support at 1.0454. A sustained break below this level would suggest the rebound from 1.0340 has ended, bring subsequent decline to 1.0390-00, then towards said recent low at 1.0340.
Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145. The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II ended at 1.4940, hence wave III is now in progress with a diagonal wave 1 ended at 1.2042, the breach of previous support at 1.1876 (wave I trough) adds credence to our view that the wave 2 has ended at 1.3993, wave 3 has commenced for further weakness to 1.0411, then towards 1.0000.
On the upside, whilst initial recovery to 1.0740-50 cannot be ruled out, reckon upside would be limited and bring another decline later. A daily close above this level would risk retest of 1.0829 but break there is needed to signal the corrective rise from 1.0340 low is still in progress for retracement of recent decline to resistance at 1.0873 but still reckon upside would be limited to 1.0930-35 (61.8% Fibonacci retracement of 1.1300-1.0340) but reckon 1.1000 would hold from here, bring another decline in Q2.
Recommendation: Sell at 1.0740 for 1.0540 with stop above 1.0840.
Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II ended at 1.4902, wave III has commenced with wave 1 and 2 ended at 1.2042 and 1.3993 respectively, wave 3 of III is now unfolding for weakness towards parity.