Bias: Slightly mixed - but still basically prefer a bearish stance while 1.1860-94 caps
Price failed to move lower yesterday and instead pushed up to the reserve resistance at 1.2070 from where we saw a perfect reversal lower to stall just above 1.1755. The wave structure is a bit mixed but while the 1.1860-94 area caps the downside does seem more at risk. To reverse this we shall therefore need a break above 1.1894 (and preferably 1.1918) to cause the upside to be reconsidered. If seen then look for follow-through to 1.1954, 1.1998 and quite possibly back to the 1.2040-69 area. This should hold on first test.
9th January: We now need yesterday's 1.2070 high to break to bring the bullish structure back to the fore. If seen then look for extension to 1.2150-80 initially and probably higher towards the 1.2368-93 highs.
While the 1.1924 low was breached we actually saw a rally to the 1.2070 resistance. This needs to hold to retain a bearish stance. A break back below 1.1810 and then 1.1755-67 would support his and if seen look for price to see more aggressive losses through 1.1719 and to the 1.1643-49 support at least. Take care here as this could cause a correction. Only loss would extend losses further to 1.1599 & 1.1551 en route 1.1488 and 1.1449.
7th January: The loss now of 1.1864 no implies much stronger losses to 1.1643-49 at least and probably further to the 1.1458 low. This area should cause a pullback but eventually I see breach to generate new lows.
ELLIOTT WAVE COMMENTS
Yesterday’s drop below 1.1684 seems to suggest we are seeing a much larger move lower. The 1.3004 high is now labeled as Wave (b) and thus the larger picture implies a larger decline of at least 138.2% of Wave (a) (1.3015 - 1.1458) at 1.0852 and more likely the 161.8% projection at 1.0485.
Thus, the first decline from 1.3004 to 1.1813 appears to be Wave (i) of Wave (c) and the 1.2393 high is therefore Wave (ii). The way the Wave (a) of Wave (iii) is developing suggests we are seeing a strong follow-through and we are only in Wave -iii- of Wave (a) now. I feel this will reach the 1.1458 low before seeing a correction in Wave -iv- and another move lower in Wave -v- to complete Wave (a).
Thus only back above a 50% retracement of the 1.2368-1.1755 decline at 1.2062-70 would force a change of direction. I feel that more likely the 38.2% retracement around 1.1990 is more likely to cap.