Friday June 11, 2004 - 01:25:30 GMT
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FX-Strategy - www.fx-strategy.com
Forecast for the US Dollar vs Swiss Franc 11th June 2004Price: 1.2480
Resistance: 1.2515 ... 1.2540 ... 1.2575 ... 1.2660
Support....: 1.2440 ... 1.2415 ... 1.2380 ... 1.2365
Yesterday's decline from the 1.2575 resistance reached the perfect support given by 1.2415-25 and by the prior declining channel high. While there may be a small risk of seeing a dip to the 1.2415 level we feel that the 1.2470-80 pivot resistance should soon break and allow the recovery to move above 1.2515 and back to retest the 1.2575 level. Once this breaks we can expect follow-through to the next Fibonacci & pivot resistance at 1.2660-80.
As suggested yesterday a pullback has been seen to 1.2425 which tested the prior downward sloping channel high. Although while pivot resistance at 1.2470-80 holds there is a minor risk of seeing a drop to the 1.2410-20 area again, we are reluctant to take a bearish stance. Thus only below 1.2400-10 and below the channel line would cause sharp losses and a return to 1.2320 at least.
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.
With a low seen at 1.2320 - just 10 points below the higher of the list of potential support levels we have seen a larger reversal. This would imply a move back twoards the Wave (b) peak at 1.2915 but above here would be required to avoid a Triple Three developing.
(c) FX-Strategy Inc 2004
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