Looking at the decline from 1.8558 in late December 2001 we can count a distinct five wave decline to 1.1989 in late July 2011. Since that low a major sideways consolidation has taken place. The big question is of course whether we have seen a wave 4 triangle or it is a B wave triangle?
Looking at the internal relationship between wave 1 - 3 and 5, we will see that wave 3 and 5 is equal in length (36.01 figures), while wave 1 is slightly smaller at 24.02 figures. That makes wave 1 66% of the length of both wave 3 and 5. The EWP principle says that two of the waves in an impulsive move tend to be equal in length, which is clearly the case here. Because of that relationship my preferred count is that we have seen a B wave triangle and not a wave 4 triangle.
Looking at the triangle, we can count a finished B wave triangle with the 1.2445 low and we should now be looking for a break above minor resistance at 1.2595, as the first strong indication that a firm test of the triangle resistance line near 1.2800 is developing and a break above here will indicate a thrust out of the triangle towards at least 1.3539 and more likely even higher towards 1.4498.
That said, as long as minor resistance at 1.2595 hasn't been broken we will have to consider the possibility of this being a wave 4 triangle. If this is the case, then minor resistance at 1.2595 will likely protect the upside for a break below support at 1.1989 indicating a thrust out of the triangle towards the downside for a final decline closer to 1.0500 before a major rally higher towards at least 1.3200 should be expected
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