Last Monday I mentioned that a new low was likely. Sure enough, we did hit a new low shortly after. On Friday, April 23rd post, I had posted that there were 2 counts that were most probable to explain the price action over the last month and a half... an ending diagonal 5th wave or a diagonal (or some call triangle) 4th wave... with the diagonal 4th as the most probable.
Today's short term action still has both firmly on the table and the likelyhood of new lows is clearly ahead of us. Here's the primary count I am following:
This has us in a wave ii of wave (iii) of wave [v]. Wave ii could take us near support in the prior fourth wave of 1.3206 - 1.3250, but it would take a break of last nights high of 1.3362 to move to the alternate, still bearish option of an ending diagonal 5th wave. The only difference in the alternate is some additional upside, likely to near 1.3450 prior to dropping down for a new low. A solid risk/reward opportunity on the short side is presenting itself with a near term bounce in 3 waves.
Although the short term is pointing clearly down, we are quickly heading into a time where a longer lasting bounce may be around the corner. My longer term EUR/USD model is still in play, and I fully expect a significant bounce to begin off the lower support trendline. The trend is down, but moving to a more cautious stance soon is certainly called for and wise.
