Sunday June 20, 2004 - 09:05:58 GMT
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General Market Outlook for FX Majors 21st June 2004
The Dollar strength we had been expecting failed to materialize and instead moved sharply higher by the end of trading. Clearly we are quite frustrated with this and have taken some time to re-assess the overall wave structure and cyclic pressures. With a daily cycle low seen in the Euro it certainly looks as if we shall see some further Dollar weakess though we doubt this will occur in a straight line. On review of the weekly charts for the Swissie and Euro was a very clear sign that the coming Dollar low - probably over the next 1-3 weeks - will probably prove to be the low for some while to come. We do not normally provide any charts in this section, but as an overview and warning we shall publish the weekly Elliott Wave and cylcic charts.
Clearly we can see the Dollar flirted with the long term uptrend line once again last week and although the daily cycles have turned higher, we anticipate that over the next few weeks the Euro upside will wane. Once this uptrend line is broken the cycles should provide a much stronger decline.
Again, although price is a little further below the weekly downtrend line, we do see that the weekly cycles turned positive at the beginning of this year. Thus when the shorter cycle find a low over the next few weeks we can expect the rally to be much stronger and does imply an eventual test of the 1.4276 high.
It is slightly early to take any positions anticipating the breaks of these two trend lines, but we publish these charts today as a point of warning in case the downward Dollar cycles begin to weaken earlier than expected. Our preference is to call the Dollar marginally lower in a choppy manner over the next 1-3 weeks to levels above 1.2350 Euro (we favor between 1.2455-1.2600) and to between 1.2185-1.2290 Swissie.
To cover the picture against the Japanese Yen, we feel the Dollar low is now imminent. As warned, we have seen the Dollar dip to 108.53 on Friday and looking at the wave structure we feel there is still one final dip to be made towards 108.15-30, probably today - but we look for this to provide an important low for a few months. The larger picture calls for new highs above 114.85 from this point and we feel the dip today or tomorrow will provide excellent buying opportunities.
Have a profitable week.
(c) FX-Strategy Inc 2004
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