Friday June 4, 2004 - 01:30:22 GMT
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FX-Strategy - www.fx-strategy.com
Daily forecast for USDCHF 4th June 2004Price: 1.2505
Resistance: 1.2535 ... 1.2565 ... 1.2595 ... 1.2615
Support....: 1.2485 ... 1.2455 ... 1.2440 ... 1.2405
Mixed - waiting for breaks
The failure for price to reach the ideal 1.2560-80 target and also the lack of downside generated from the 1.2534 peak has led to an impasse of bullish and bearish structures. Thus to return to a bullish picture we require a move back above 1.2535 and then 1.2565 which we feel would trigger further gains up to 1.2595 and we suspect to the 1.2630-65 pivot resistance. However, if seen we feel this will cap on the day.
Although we saw reversal lower yesterday from the 1.2535 level this failed to generate as much weakness as we would have expected. Thus we can only begin to renew a bearish view on a break of support at 1.2440-55 which would then allow losses to follow-through to 1.2370 at least and quite possibly all the way down to 1.2325. Further support is found at 1.2280.
Elliott Wave Comment:
We have attempted to make more sense out of the complex cycles in the Swissie and consider there is a strong risk of a final low occurring this week. From the daily chart above is can be seen that we have altered our Elliott count for the rally from 1.2140 to 1.3226 into a rising diagonal triangle Wave(A) and thus we are witnessing a correction in Wave (B) that should develop in a three wave decline or a series of three waves. We therefore prefer the count shown below that has the decline developing in a Double Zig-Zag.
Within this we need to concentrate on the second Zig-Zag labeled as (a)-(b)-(c) and we can produce two potential target areas for this move, these being at 1.2370 representing a 138.2% projection of Wave (a) and the second being at 1.2280 representing a 161.8% projection of Wave (a). Neither has preference. If we look at Fibonacci retracements of the move from 1.2140 to 1.3226 we see a 76.4% retracement at 1.2395 and an 85.4% retracement at 1.2300. Thus we need to observe price action closely during this week and expect a deep recovery at some point.
One word of caution: It is quite possible that the 1.2405 low has satisifed our downside target. While, until 1.2595 breaks, there is still minor risk of a spike lower to 1.2325-70 (max 1.2280) we feel the greater risk is now higher to the Wave (b) high at 1.2915.
(c) FX-Strategy Inc
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