Bias: The 1.2215 area needs to cap to retain a directly bearish stance
The underlying bearish trend resumed yesterday to reach 1.2024. We're closer to a low now and should therefore be aware that a reversal higher will be due any time soon. However, I still feel we will have a to wait for a touch longer before this occurs. Any sooner would require a break above 1.2210. If seen the risk will turn immediately higher though I note that the hourly chart is not boasting a bullish divergence. Next resistance is at 1.2275and the 1.2331-46 which should hold.
28th January: The pullback has been very shallow and we need take care with the upside. Above 1.2331 would suggest 1.2394 and a small risk of 1.2445 & 1.2489-10. Only above would suggest a larger reversal higher.
The 1.2331 high held and the break below 1.2224 and 1.2184 took price down into the 1.2066-94 support area which has caused a pullback. It maybe that we'll see a consolidation before the final move lower and any pullback should ideally remain below 1.2210 and no higher than 1.2230-40. To see the anticipated final move lower a break below 1.2089 will assist and cause follow-through below 1.2024 to reach to the ideal 1.1900-31 targeted support.
28th January: The target remains at 1.1900-50 (ideally 1.1931) and this will still be the target while 1.2394 and 1.2510 caps.
ELLIOTT WAVE COMMENTS
The decline in what I feel is Wave ^c is progressing well. The eventual target remains around the 66.7% projection at 1.1931. As we get closer we may need to allow for a little more two-way movement but even if we see a second Wave x this should ideally remain below 1.2386-1.2418.
The warning of a pullback was timely and we did see a 3-wave move to the 1.2331 high which represented a 38.2% retracement in Wave x. We still have to be cautious in case a 50% retracement develops to 1.2394. A move below 1.2224 and 1.2180 may suggest that we are seeing a direct resumption of the downside with break below 1.2139 providing the start of a losses to the 1.1931 target area.
The second Wave x held at 1.2331 and we have seen Wave a down to 1.2024. While the pullback in Wave b remains below the 61.8%-66.7% retracement around 1.2210-30 we should then see Wave c move lower to the 1.1900-30 target. The only earlier risk is that Wave b develops in a complex holding pattern before the push lower.