According to wave count this currency pair has just ended developing corrective wave B of the med term downtrend (colored mangenta) on the chart. Now the pair is potentially developing impulse wave C within daily corrective wave B (colored royal blue). To confirm wave C the price needs to exceed 131.70 - this is the top of wave A.
In this case the targets of the downside movement are Fibonacci retracements of 127.62-135.03 and expansions off 135.03-131.70-133.75.
Supports:
- 131.69 = contracted objective point (COP)
- 131.32 = .50 retracement
- 130.45-42 = confluence area of .618 ret and objective point (OP)
In case the price breaks out of the flat to the upside the nearest targets will be Fibonacci retracements of 135.03-131.70, and expansions off 127.62-135.03-131.70 (daily A-B waves - royal blue), and 131.70-133.75-131.94. Before 133.75 also consider resistances of 133.75-131.94.
Resistances:
- 132.85 = .50 ret
- 133.06 = .618 ret
- 133.21 = COP
- 133.76 = .618 ret
- 133.99 = OP
- 135.26 expanded objective point (XOP)
Overbought/Oversold
The Detrended Oscillator is now oscillating around the zero with the last peak down exceeding the previous peaks. This may be a good confirmation of wave C in development. Short entries are favored when the price hits a Fibonacci resistance or gets into the overbought - some 40-50 pips above the current price.
Read more on how to apply Fibonacci studies to calculate price targets.