Prices sank lower yesterday but there was a sharp bullish push on the hourly chart this morning. This may signal the next wave up, which is probably the C wave of a zig-zag pattern which is correcting the 5-wave move down from the Aug 6th highs.
C could end at significant resistance highs at 1.2920 and this is also the terminus of the wave 4 of lesser degree –a common endpoint for corrections. A more conservative target could be 1.2815, where wave C would be exactly equal to wave A, their most common relationship.
There is also the possibility prices will push even lower and break the 1.2625 lows. This could mean wave B was still unfolding and we were in a flat correction instead.
Analysis prepared by:
Joaquin Monfort
Forex4you analyst