Today's support and resistance levels:
S1: 123.43 R1: 124.44
S2: 122.98 R2: 124.90
S3: 122.20 R3: 125.57
Technical overview:
With the break below 124.01 we got the final confirmation, that wave 3 did indeed end at 127.70 and wave 4 now is in force. Wave 4 corrects wave 3 and as wave 3 clearly was an extended wave, we should at least see a 23.6% retracement of wave 3, that would mean a correction down to 121.24. A more normal correction would be a 38.2% correction of wave 3, which would take us down to 117.24. This levels also marks the bottom of wave 4 of one lessor degree and is a very common retracement target. As wave 2 was a running flat correction we will be looking for a more simple structure in wave 4, something like a simple zig-zag correction. In the short term, we are looking for a break below support at 123.42 for a continuation down to 122.98, where we expect wave a of 4 to end. Only a break above 124.50 will invalidate that call for a move towards the 125.70 - 126.05 area before going down again.
Trading recommendation:
We short EUR from 125.65 and will move our stop lower to 124.55. We will place our stop profit at 123.25.