Bias: I still feel we should see higher to 1.5152 but must allow for an earlier dip to 1.4788-04
The dip to 1.4502 was frustrating but from there the rally was impressive to reach 1.4990. I still feel the risk is for further gains. The short term problem is identifying where the pullback will stall. I suspect this should be quite limited and see support at 1.4846 and 1.4804. Ideally this should hold. However, do allow for 1.4788. A break back above 1.4925 would assist back to the 1.4990-05 resistance. This must clear to see the 1.5040 resistance but given the rally we have seen I feel the more likely target now to be 1.5152.
7th January: We have already reached the 1.4985-1.5037 resistance and the structure from the 1.4375 corrective low doesn't look complete and while 1.4788-1.4804 supports I feel we can move above 1.5040 to reach 1.5152 before the downside dominates again.
The rally has been choppy and given the hourly bearish divergence that came just below the 1.5037 resistance we should be aware of the downside risk. We have to be cautious at first as within a bullish structure we could still see price slip to the 1.4804-46 area at least and maybe even 1.4788. However, that should be stretching things a bit. Thus a break of 1.4788 would raise the alarm bells while below the 1.4734 pivot support would generate a stronger decline to 1.4650-80 at least and probably further to 1.4607 and 1.4550-70.
7th January: Having seen the structure of the rally change slightly with the dip to 1.4502 I suspect we may need to allow for 1.5152 before lower. However, the larger picture remains bearish and below 1.4734 would allow the larger downtrend to resume.
ELLIOTT WAVE COMMENTS
Yesterday was a bit of a nightmare with the drop to 1.4502 only to see price then rally strongly to 1.4990. I can only see that this is Wave c of a recovery in larger Wave -b- of Wave -v-. A 50% retracement lies at 1.5037-43 while a 58.6% retracement lies at 1.5152.
Now, if we take the 1.4739 high as Wave i of Wave c and the 1.4502 as Wave ii then a 138.2% projection implies a target at 1.5005. It maybe that yesterday's 1.4990 high satisfied this target. Given that Wave iii was so deep and the prior wave development was choppy it suggests that Wave iv should be fairly short and thus we can look at a 38.2%-41.4% retracement at 1.4788-1.4804 as the likely stalling point. Also note the deeper 50% retracement at 1.4734-46.
Thus, while this 1.4788-1.4804 support holds we can still see a Wave v higher and then as long as we get a break above 1.5005 I'd look for a move not just to 1.5037-43 but all the way to the 1.5152 area which is also implied from a 161.8% projection in Wave c.