EUR/USD: Hammered post 1.13 resolution, more pain ahead

Cycles & Levels: We have entered new unchartered territory in 2018 by breaking through the weekly support of 1.13. This activates the next projection target of 1.0863. On the daily, the pair is about to make it to its minimum magnitude extension of 1.1185, which should be perceived as a milestone that sellers must achieve to keep the developing down-cycles in a strong grade. The 100% projection target that I am looking at stands at 1.1129. On the hourly, it could be argued that based on the measurement of a 100% projection off the 1.1353 breakout point, we may have reached a temporary exhaustion area circa 1.1215, although the current conviction in order flow, its relevance should be more questionable.

Correlations & Volumes: The five-year German vs US yield spread keeps bleeding into new year lows, while the German vs Italian is quickly moving to revisit its most recent lows, currently at 3.03%. The close of the daily candle, with absolutely no interest to take profits off the table, and with the POC at 1.1267 above the close by5pmNY are all signs that suggest more pain ahead.