The powerful rally yesterday clearly showed us, that we where looking at a wave iv correction and that one more new high was needed. We have already seen this new high with the test of 121.30, which is just two small pips above our ideal target. So we could have the top of wave 3 in place with the test of 121.30, but to confirm that we need a decline below 120.08 and more importantly a break below 119.25. That said we know, that we are getting close to the top of wave 3 if have not seen it already. However, as long as we have not seen a break below 120.08 we must accept the risk of a move a little higher towards the 121.66 - 121.77 area before the top is finally in place. What can we expect from the coming wave 4. The absolute minimum would be a 23.6% correction down to 116.35, while a more normal correction would take us down to the 38.2% corrective target at 113.29. Time will show us which target is the correct one.
With the break above minor resistance at 1.5836 and more importantly the break above resistance at 1.5855 we knew that the expanded flat correction had finished already with the low at 1.5750 and that the blue wave iii higher had already begun. The first target for this blue wave iii is at 1.6054, but we expect this blue wave iii to extend, which calls for a continuation higher towards 1.6218 and more likely 1.6500 before blue wave iii is likely over. Short term we can expect support at 1.5930, which will ideal protect the downside for the next rally higher towards 1.6054. However if we see a break below 1.5930 we must allow for a decline to 1.5904 before the next move higher. At no point should we see a decline below 1.5836 as that would leave us with a none impulsive move up from 1.5750.