EURUSD: 6.26am

The daily chart of the descending regression channel off 1.3171 is still the bearish argument to be dismissed. I had been tracking a 'b' wave up from 1.2659 within a 'B' wave down from 1.3171 possibility, aided by that trend line from 2010 that has been providing a 'Kiss Goodbye' sensibility to the apparent ceiling we have. The trendline T6 and the monthly Donchian channel provided resistance at the same point and D6 provides not only a target since its 'cut' back in August 2011 but also a legitimate gateway to a retest of 1.2041. This is of course just an option, but one that I think the bullish argument is struggling to overcome at present. That daily SMI ate up a lot of ground quite quickly from the 1.2659 low and looks very 'b' like to me. I am quite happy for it not be, but for now, it looks toppy. The grid line study I showed yesterday, highlighted the confluence of support at the Gann line 1.2878 (off 1.2041 low) and T4, being my key trend indicator. We certainly got a reaction there and I was quite happy to switch my shorts for longs for that punch up. That has provided us with the same lines to backtest again and failure to hold may see that decline under 1.2878. This would see price draw under the T4 line and push for the green dashed line, being the 85.4% fibfan that underpins this whole drive up from 1.2659. Break that and well I would go back to the D6 failure scenario above! The monthly and weekly My-Waves survived that first backtest yesterday, but the D4 trough is providing traction as I had hoped it would when I was shorting the top last week. This is being aided by the backtests of D3, D6 & D7, all of which show a neat confluence where the red dotted line is on the first monthly chart there (D3 is on the weekly chart crossing D4). It is the failure for D4 to hold however that needs to be borne in mind, as that will bring on the test of D6 and failure there will put pay to the Bullish argument for now and wash my downhill 'c' of 'B' case right onto shore. If D2 fails, that weekly My-Wave is going to fail and we at least go down for another leg in this retracement of 1.2659. Worth reviewing previous posts about the T6 v T7 debate and for now, T6 is making heavy weather of its chance to support the bulls. It would seem, some tennis is at play here!