Last week I had written in our trading room that we were approaching our intermediate target zone for wave ((c)) of B down and was looking for a reversal out of the pair ideally after a move slightly lower into the longer term target zone. At the time of that writing we were trading just over the 1.0530 level just over our ideal target zone of 1.0557 – 1.0179. Well the pair ended up bottoming at 1.0495 and is now currently trading close to 300 pips higher just under the 1.0800 level.  Of course the question ahead is, what is next for this pair?

As is evident on the chart we can see that the move up off of the 10/29 low has been very strong and so far impulsive in nature. What we typically expect to see at the conclusion of an Ending Diagonal is for the move out of that diagonal to return to the origin of that diagonal very rapidly. In this particular case the origin of the Ending Diagonal was at the 1.0982 level so this is the ideal initial target level for our initial move up off of the 10/29 low.

Again ideally this pair does make it up to at least the 1.0982 before seeing a significant retrace to give us further confidence that a bottom has in fact been struck. Now with that being said even if we do retrace prior to reaching this ideal target level as long as the retrace is corrective in nature and is able to hold over the 1.0645 level then we will be looking much higher in this pair in the coming weeks and months.