Commentary: We wrote yesterday that "with the decline from the top looking corrective (as opposed to impulsive), and with the a and c legs of the correction close to equal (218 and 199 pips), there is potential for a sizeable rally as long as price turns higher from close to current levels.
Although reward to risk favors longs here in the short term, we are wary of getting too aggressively bullish longer term due to the extreme sentiment (USD bearishness/Euro bullishness), as evidenced by the COT report. The favored wave count does indicate one more high above 1.3680 in a 5th wave before an impulsive decline occurs. We are willing to take a bullish stand against the swing low (1.3410) for an eventual retest of 1.3680. Intraday bullish divergence with oscillators on the hourly favors a turn higher as well." Short term support should be strong at 1.3460/70 and we can raise our stop to 1.3420. The 161.8% extension of 1.3410-1.3470/1.3420 at 1.3517 could offer short term resistance. Strategy: Bullish against 1.3420, targeting 1.3680