Tuesday October 5, 2004 - 01:06:19 GMT
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Forex: General Outlook for the Four Majors
While on one hand we are encouraged in our long term view with yesterday's strong showing for the Dollar we were also frustrated with having our shorter term bearish view, looking for one new low, dashed. Still, while the short term appears to have confirmed reversal we now need to concentrate on the long term reversal signals which we see as a break below 1.1985 Euro, 1.2857 Swissie, 1.7705 British Pound and 111.60-80 against the Japanese Yen. What will be important to bear in mind is that the underlying direction now should be higher for the Dollar and thus do not try and stand in the way of a steam train should the Dollar upside become aggressive.
In the meantime we need to see a little more on how the wave structure develops to get a stronger idea of the likely support & resistance levels along the way. From this point of view we feel that today could well see some further limited Dollar gains but we feel range trading is likely to dominate. Details of levels are in the individual analyses.
At least against the Japanese Yen we saw an almost perfect top at 111.18-20 and while price remains above 110.65-75 there should be an additonal leg higher to the 111.60-80 area before a deeper correction.
(c) FX-Strategy Inc 2004
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