I'm still looking for a minor decline towards 123.80 in wave ii of 5. At 123.80 wave ii of 5 will have reached the bottom of wave four of one lessor degree, which is a very common target for second waves. That said, we could see wave ii move lower towards 122.62 and even 121.82, where wave ii would have corrected 61.8% of wave i, but the Market has been really impatient with this cross, therefore we would not expect such a deep correction. Once this wave ii correction is over we should expect a powerful rally in wave iii of 5 towards at least 130.72, but a more likely target will be 134.58, where wave iii will be 1.618 times the length of wave i.
We did see a break below important support at 1.5718, but only a very brief break and the following rally does look very impulsive. This is another warning that this wave e likely will fall short of its ideal target. That said, we need a break above 1.5878 and more importantly a break above 1.5934 to confirm, that we have seen a bottom at 1.5592 and that a new rally higher has begun. As long as resistance at 1.5878 protects the upside we are still very cautiously bearish, but we need some serious prof, in form of a break below support at 1.5739 and more importantly a break below 1.5657 to confirm renewed downside pressure.
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