The rally from 121.56 exhausted already at 124.13 followed by a deep correction to 121.83. If wave iii of 5 has begun we can not accept a break below 121.56 at any time. If we break below 121.56 we know that wave ii of 5 still is ongoing, but the downside should be limited. On the other hand a break above 122.75 and more importantly a break above 123.70 will indicate, that wave iii is indeed unfolding and we should expect a powerful rally higher towards 133.54 to develop.
The gap from 1.5776 down to 1.5704 has not been closed, that could be another sign of major underlying weakness here. That said, we still need a clear break below 1.5600 to confirm that weakness. Short term we are looking for resistance at 1.5673 and again at 1.5689. We would like to see one of these resistance levels protect the upside for the clear break below 1.5600 for a continuation down towards at least 1.5390 and ideally close to 1.5200. However, if we break above 1.5689 we should expect more filling of the gap towards 1.5776.
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