From Ost desk...the Euro exploded yesterday after Non vote Fed member Kocherlakota comment that's Fed should not raise the interest rates in 2015 including Greece issues, jumping about 225 pips low to high in short squeeze fashion, and reaching a 13-day high at 1.1534. In my opinion, the technical reason for this jump is breaking above what this report called an important resistance area at 1.1361/76. This is yet another step towards confirming my theory that we have already seen a very very important bottom at 1.1097, from which the price will rise for thousands of pips or turning back to parity again.

   After such a very sharp jump, the retreat which brought the Euro down to 1.1437 so far is only normal and expected. What we need to do now is to make a list of the potential targets for this falling correction, and to try to determine where is the best area to enter the market buying the single currency.

   On Thursday, the price bottomed at 1.1262, which as this report mentioned before, is only 2 pips above an important micro term level. Stopping this close to Fibonacci levels usually marks the end of a wave, and the beginning of another. Therefore, we can assume that the wave that topped at 1.1534 yesterday has started at 1.1262. Now we calculate the retracement levels for the move from Thursdays’ Fibonacci bottom 1.1262, to yesterday’s 13-day high 1.1534. The key retracement levels for this move include 1.1430 which is only 7 pips above the current daily high at the time of preparing this report, followed by an ideal target at 1.1398, which is my favorite level & 1.1366. The retracements also include an important level at 1.1340, but it is not probable to reach there, because if the wave count of attached chart is correct, the price will not trade below the top of wave (1), which is Thursday’s high 1.1368. Therefore, a break below 1.1366/68 is not expected at the moment, but in case this surprise happens, the price will be expected to target at least one of those potential targets: 1.1340, 1.1316, 1.1284, 1.1264 (probably the most important of these levels) & 1.1222. It is highly unexpected to break below all of these levels, but in case that actually happens, January’s 11-year low 1.1097 will probably come under attack by the bears.

   As for the resistance, first we have the top of the intraday channel which can be drawn from yesterday’s high. The top of this channel is at 1.1492. A break above this level will probably result in another move higher targeting another test of yesterday’s high 1.1534, ahead of 1.1596. A break above 1.1596 would open the way higher towards 1.1639, ahead of January 21st top 1.1697.