Wednesday November 2, 2005 - 00:48:51 GMT
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Forex: Daily Forecast for the U.S. Dollar vs Japanese Yen 2nd November 2005 Price:
Resistance: 117.10 ... 117.49 ... 117.94 ... 118.08
Support....: 116.40 ... 116.09 ... 115.85 ... 115.67
While the structure is a little unclear we favor a peak at 117.10 and base at 116.10-30
A rather strange day which has complicated the wave count with all the ratcheting higher and therefore we do need to be a little cautious. We note resistance at 116.91-117.10 and suspect this area could cause a larger pullback. Thus a stronger bullish stance is only valid on a move above 117.10 in which case we'd look for extension to 117.49 at least. Again this area could cap but breach would imply follow-through to 117.94-118.08.
No break back below 116.30 and price has edged higher. We need watch the 116.91-117.10 range as this does provide good resistance and we tend to favor this causing a retracement back to 116.40 and probably 116.09-20. However, at this stage we feel this is the maximum downside. Thus only below 116.00 would allow losses to extend to 115.67-85.
Elliott Wave Comments:
1st November 2005
Price has risen to the 116.50 target and a few points above and this could therefore be labeled as Wave -b- of an expanded flat. However, with the general break higher in the Dollar against the European currencies we need be aware of the risk of a more bullish structure. The two scenarios are:
(1) An expanded flat with this morning's peak at 116.65 being Wave -b- of Wave [iv]. This would imply a (probably quick) decline to the 114.84-115.08 area and then followed by a move down to the 114.27-59 area - the higher level being the first retracement lower in Wave -a- and 114.27 being a 14.6% retracement in daily Wave [iv].
(2) With the move to 116.65 from 114.84 being close to wave equality of the initial move from 114.59 to 116.23 the peak seen this morning could be Wave -i- of Wave [a] of daily Wave [v]. This should imply a pullback of around 50% at least which generates a target of 115.62. This could then provide Wave -ii- and then convert into a stronger move higher in Wave -iii-.
2nd November 2005
The break above 116.50-65 negates the expanded flat scenario and suggests that the 114.59 actually provided the low for daily Wave [iv] which we consider exceptionally shallow. Thus we now need to establish the wave structure in Wave [a] of Wave [v] with yesterday's ratcheting rally confusing the issue somewhat. All we can do at this stage is note an internal target around 116.91-117.10 and then 117.49 and observe the wave development in order to recognize the likely structure.
(c) FX-Strategy Inc 2005
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