Thursday October 27, 2005 - 00:47:25 GMT
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Forex: Daily Forecast for the British Pound vs U.S. Dollar 27th October 2005 Price:
Resistance: 1.7797 ... 1.7820 ... 1.7847 ... 1.7867
Support....: 1.7735 ... 1.7715 ... 1.7687 ... 1.7652
While 1.7715 supports we still see risk back to 1.7867 and after a pullback to 1.7946-50
The pullback was deeper than expected but we still see the main risk as higher. This should keep the 1.7715 level intact and with the break higher as we write, we feel 1.7770-90 should indeed support. A break above 1.7820 will extend gains back to the 1.7867 high where a small pullback is possible. However, we feel this rally should move to the 1.7946-50 area which we cautiously consider should cap. Further resistance is at 1.8000.
We saw a deeper than expected pullback yesterday but given the sharp move higher as we have been writing we tend to feel that it would be better to wait for better selling levels. We feel this should come around the 1.7946-50 area but this could take until tomorrow. Thus, only an earlier break below 1.7770 and then 1.7715-35 would imply direct losses in which case we'd look for follow-through to 1.7632 at least which should cause a reaction higher. Next support is at 1.7572-87.
Elliott Wave Comments:
26th October 2005
The reversal higher from 1.7632 appears to imply this as a Wave x from where we are seeing a rally which we still feel has further to go. At this point, while the wave structure within this rally is a little vague we feel that we should complete a Wave iii at 1.7890-00 and should then see a pullback in Wave iv to the 1.7790-1.7810 area. This should imply a rally to the 1.7946-71 area where we shall re-evaluate. If we look at the larger picture we see a 50% retracement in Wave [b] at 1.7946 and a 58.6% rertacement at 1.8041 and we focus on these two areas for signs of a cap developing.
27th October 2005
The 1.7867 level actually provided a peak to a third Wave a in the recovery from 1.7390 with Wave b seen at 1.7715. Thus we look for this rally to move through to the 50% retracement level at 1.7946 with Wave c then equal to Wave a (at 1.7950). This should then complete Wave [b] and trigger the resumption of the underlying downtrend.
(c) FX-Strategy Inc 2005
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