While we remain quite comfortable with the fact that the decline from the third wave peak of 1.0845 is corrective and will eventually break higher, we are still wrestling with the structure of the pattern. Were if not for this particular wave sequence in a 3 wave format where we should have seen a 5 wave pattern, we could just label the drop to 1.0625 an A wave and the rally to 1.0800 a B wave. This would project a C wave decline equal to the A wave of 1.0580. However, from a timing standpoint, this three wave decline to 1.0625 may be an interim B wave low in a more complex double flat pattern that could still force an interim drop to 1.0640 and a final attempt at 1.0775 to 1.0800 before the second and final decline to an ideal 1.0575-1.0580 target zone. This lower level represents a full 38.2 percent correction to the entire rally from 1.0140 and should set a base for the next leg of uptrend to 1.0920 and probably a rally to test the 1.1080 medium term peak.
By Don Haines, MarketVisionTV.com
