After the break above the falling channel resistance line, we working our way higher towards the top at 133.81. This weak rally will, as I have said, be a bumpy ride, with lots of deep set backs and once this rally is over, we should look for a new decline towards at least 124.96 and possibly lower. Short term I'm looking for support at 131.06 to protect the downside for the next rally higher, which a break above minor resistance at 131.75 will confirm. However, if support at 131.06 breaks we should not expect a deeper decline, than to 130.79 before the next rally higher.
The minor road-map I laid out yesterday has pretty much described the price action. However, the decline from the top at 1.6685 (we expected a top at 1.6675) has be deeper than our expected 1.6603 as we have seen a low at 1.6565. The rally from 1.6557 to 1.6685 was a minor five wave pattern and therefore I have counted it as the first minor wave of red wave iii higher towards 1.7248. If this count is correct, then we must allow for a 100% retracement of this minor wave one, but we can not allow just a single pip below 1.5758 as that would force me to adjust my present count. That said, I'm still expecting support at 1.6565 to protect the downside for a break above minor resistance at 1.6633 and a break here will confirm the bottom for a rally back to 1.6685 and higher towards 1.6762 and 1.6817 on the way towards 1.7248.
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