Friday February 4, 2005 - 02:41:18 GMT
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Forex: Daily Forecast for the Euro vs U.S. Dollar 4th February 2005 Price:
Resistance: 1.2988 ... 1.3005 ... 1.3035 ... 1.3065
Support....: 1.2950 ... 1.2920 ... 1.2904 ... 1.2883
Slightly mixed but while 1.2988 can cap we look for losses to 1.2904-20 at least
The break of 1.2962 caused a move as deep as 1.2940. This area is important if there is to be any stronger recovery while a break back above 1.2988 would allow the Euro to extend the pullback towards the 1.3005 pivot resistance and probably through there to 1.3064-70. Any further than that and we feel the upside comes back into play and could cause further gains above 1.3122. Next resistance is found at 1.3206.
The breach of 1.2962 does suggest potential for more direct downside though we need to hold back slightly until the 1.2940 area breaks. This should allow a test of the 1.2904-20 area but again, this could cause a pullback. However, even then we do not forsee any move above the 1.2995-1.3005 resistance area and further losses should then be forthcoming. Directly below 1.2895-1.2904 would allow losses to 1.2800 at least. Further support found at 1.2735.
Elliott Wave Comments:
3rd February 2005
With the peak at 1.3092 yesterday completing an ABC pattern and implying a corrective structure it would appear that we are seeing a triangle pattern. We need to be a little cautious since this may be a Wave X following an ABC rally to 1.3122 with the implication that the next move is higher. However, with weekly and daily cycles bearish we tend to feel the downside is the greater threat.
Given this premise, we look for a dip to 1.2962 in Wave d of the triangle which should then allow a final correction to the 1.3060-80 area before the downside continues. Now, the triangle could still be Wave B of Wave (v) and thus we'd look for a move down to the 76.4% projection at 1.2800. If this breaks then it could be that we've seen an exceptionally shallow correction to the entire 1.3666-1.2921 decline and this would mean a larger move down to 1.2400-60 at least...
However, one step at a time - let's us look at what happens over the next day or two to see whether the triangle is confirmed.
4th Febraury 2005
The downside looks good with the 1.3050 peak appearing to have completed the triangle. We should just beware of the 1.2904-20 support area in case that causes a flat correction but with cycles looking bearish we feel the downside is the stronger argument.
(c) FX-Strategy Inc 2005
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