Consolidation continues following Monday’s interim low at 1.3494, underlying signals/structures/correlations point to an eventual continuation lower. The price action since Monday’s low looks very overlapping and corrective, particularly versus the sharp sell-off seen over the last week. The first confirmation of a downside break from the recent consolidation should be given by a push below the interim lows from the past two days at 1.3557-1.3556. The next notable target/support region below the market should then be formed by the converged possible ABC equality target from the May highs and the 50% retrace of the rally from the June ’10 lows to the May ’10 highs at 1.3447-1.3408. Thinking more medium-/long-term it’s important to keep the setup on the multi-week charts in mind. The market has just made a material weekly close below both the uptrend from the June ’10 low and the 55-wma. From a multi-week/-month perspective this warns of a move back toward the converged base of the multi-year range and the uptrend from the January ’02 lows; 1.2378-1.2329. This type of move would fit with potential multi-month signals from valuation related charts discussed in recent updates.
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