However, monthly chart tells us, there is still another leg down pending -
- Head and Shoulder breakout gave us a downside target of 0.6460, but the pair turned higher from 0.6827 (near 2004 low), So the target is yet to be achieved.
- Plus, plotting waves shows us the fourth wave correction may come to an end around the falling resistance.
- As per wave rules, when the third wave is extended, the fifth wave usually matches the first wave in magnitude/duration.
- So wave 5 can take us down to 0.5668 by late mid-2018 (assuming it begins in next two months). This is because wave 1 led to a drop of 2232 pips during the time period of July 2011 to Aug 2014.
Fundamental also indicate there is still juice left in the view as -
- China rebalancing is far from done.
- Oil may have recovered, but base metals (& iron ore) are have little hope unless China rebalances (as that will help fuel export powerhouses across the globe and thus improve demand for metals).