Even though the rally from 128.00 has been much bigger than expected, I'm still looking for a break below 128.00 soon and an acceleration towards the downside. I counted the decline from 130.56 to 128.00 as red wave i of iii of c and the rally we have seen from 128.00 to 130.43 as red wave ii and I'm therefore looking for red wave iii down. Short term I would like to see minor resistance at 129.91 protecting the upside for a break below 128.98, which would confirm a new decline towards 128.00 and lower towards 126.57. However, it is vital that we don't see a break above important resistance at 130.56. If this resistance breaks, it not alone will invalidate my bearish count, but it also swings the entire picture towards a more bullish count and a rally back towards the high at 133.81 in a very complex correction.
The rally of the 1.6225 low has been impulsive in character (in five waves), which is what we would expect after the triple correction down from 1.7111. Short term I would like to see support at 1.6445 protecting the downside for a break above 1.6600 and way more important a break above 1.6688, which confirms that a new rally towards 1.7111 is developing. However, if support at 1.6445 should break, it should only open up for a decline to 1.6397 and maybe towards 1.6356, before the next rally higher is expected. That said as long as the resistance line from the 1.7111 high has not been broken, we will have to consider the possibility of the decline from the 1.6688 high down to 1.6225 as being wave a of Z and the rally from 1.6225 as wave b of Z and if this is the case we need one last decline towards 1.6144 before the triple correction from 1.7111 finally find its low. This count is not my preferred count, but we must consider the possibility and be flexible.
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