Commentary: The break of the head and shoulders neckline is real. We wrote about the neckline break yesterday and also mentioned that “the decline from 1.0591 looks impulsive. Favor the downside for a test of 1.0340 as long as price is below 1.0591.” 5 waves lower appear complete from 1.0591 so a bounce to the former 4th wave at 1.0445 is expected before the next move lower.
Where this 5 wave decline fits in the larger structure is not completely clear but 5 waves down is evidence that the trend is down and that rallies should prove corrective. Additional resistance is the 61.8% of 1.0591-1.0394 at 1.0516. Favor the downside as long as price is below 1.0591 for a test of 1.0340. Strategy: Flat