Commentary: We wrote last week that “we see potential for a third of a third wave to unfold towards the 161.8% extension of 1.3370-1.3546/1.3450 at 1.3734.” The EURUSD is closing in on the 1.3730 target. Near term support is at 1.3627. The advance from 1.3360 has stalled near the 61.8% retracement from the top (1.3852) to 1.3360.
A larger more complex correction may be playing out. In this instance, the rally from 1.3360 would end up as an a-b-c rally with the rally from 1.3450 unfolding as wave c (and in 5 waves). Even in this bearish alternate count, we expect a new high above 1.3684 before a reversal. The 78.6% at 1.3747 is a potential reversal point.
Strategy: Remain bullish, move risk to 1.3540 (from 1.3450), target hit at 1.3620, second target is at 1.3730