EUR/USD - Wave iii down is done and wave iv underway

I back from a very nice holiday on the Island Lancerote. As I was away the wave (iv) triangle (see the hourly chart below for details) finished at gave us the final thrust down in wave (v) to end wave iii. On the day chart above the support line was broken for the second time since the downtrend began in November 2009 and we have seen positive divergence building as wave (iv) progressed. We should now see wave iv correct towards the 126.18 - 126.72 area, which is both the 38.2% of wave iii down and the top of the previous wave (iv) of one lessor degree. This is a common target for wave iv setting the stage for wave v down and finally pin-pointing the end of wave 3 down.

The mood towards the Euro is very bearish at this point, and News Week just had a cover declaring "Death of the Euro". I do think News Week has been out declaring the end of the Euro at a very early stage. Only in November it was the USD that was headed for destruction. It is always worth noticing cover stories as they very often fore say a coming turn in the trend, but this time I only think it will be a minor trend change ending wave iii setting the stage for wave iv.

The USD-Index (not shown) should head for 85.20 as its wave iv progresses.