Friday October 28, 2005 - 00:55:52 GMT
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Forex: Daily Forecast for the British Pound vs U.S. Dollar 28th October 2005 Price:
Resistance: 1.7849 ... 1.7867 ... 1.7902 ... 1.7946
Support....: 1.7817 ... 1.7787 ... 1.7750 ... 1.7732
Mixed - waiting for breaks
The peak at 1.7902, while appearing encouraging for the underlying bullish stance, was rather unusual and thus we feel that we would like to see evidence of further gains before the rally to the 1.7946 target. We need to see 1.7817 (max 1.7787) support any earlier dips and then for a move back above 1.7849 and 1.7867 to keep the upside intact. If seen, look for follow-through above 1.7902 and to the 1.7946 target area. We feel this should hold. Next resistance is at 1.7960 and then 1.8000.
The move higher to 1.7902 does look, at first glance, to be bullish. However, the pullback has been deep and appears to warn of a second move lower. Thus if we see a break of 1.7817 and then 1.7787 we feel the risk lies with follow-through down to 1.7710-32 but will look for this area to hold. Next support is at 1.7646.
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.
28th October 2005
While the move to 1.7902 looks encouraging for the underlying corrective rally, we note that it represented a 23.6% projection of the 1.7867-1.7715 decline and may thus be an expanded flat Wave x. Thus we retain the minimum target at 1.7946 but may need to accommodate an initial pullback to 1.7710-32 before the rally to target.
(c) FX-Strategy Inc 2005
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