Bias: While 1.2530-50 supports I see risk of a test of 1.2786
Gains were seen as expected but stalled at 1.2696. I still suspect we should see another attempt higher. This will need the 1.2530-50 area to support and while it does we should see price push back above 1.2650 to extend gains above 1.2675 & 1.2696 to the 1.2786-1.2922 area at least. Only above causes more persistent gains to 1.3000-15.
16th January: The break above the 1.2564 target suggests we are seeing a much larger rally and while support at 1.2387 (max 1.2319) holds we should see gains develop above 1.2671 for 1.2786-1.2824.
We are seeing a pullback from the 1.2696 high seen yesterday but I see good support between 1.2530-50 which I feel will hold. Thus for a bearish stance wait for break of 1.2525 and only if seen would I have to reassess and feel that the downside risk is higher. If seen then look for the downside to be more dominant for 1.2444 at least. Below there is a congestion zone at 1.2375-00 and the lower at 1.2290-10.
16th January: The direct push higher yesterday means we need to place any bearish stance on hold. More likely we shall get a selling opportunity closer to the 1.2786-1.2824 area. Only an earlier break below 1.23 reverts to the downside again.
ELLIOTT WAVE COMMENTS
Yesterday's press higher suggests that we are seeing a more direct rally in a series of ABC moves with the first stalling at 1.2338. The pullback to 1.2102 was therefore a Wave x and from there we have seen a 5 wave rally to the 1.2671 high. This forms the second Wave a and thus what we are seeing now is Wave b. I note a 50% retracement at 1.2387 and 61.8% at 1.2319.
Thus from somewhere between these retracements look for Wave c to begin. Until we establish this base it I can only approximate the next move. However, I have tentatively labeled the 1.1755 low as Wave ^d and this would imply an end in Wave ^e at the 66.7% projection at 1.2786.
Thus only a break below 1.21 would confirm larger losses.
The 1.2786 target in a triangle is not too far away and while the 1.2525-50 area supports it is still valid.