Tuesday June 29, 2004 - 01:10:23 GMT
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FOREX - Daily Forecast for the British Pound vs US Dollar 29th June 2004Price 1.8270
Support....: 1.8310 ... 1.8340 ... 1.8355 ... 1.8380
Resistance: 1.8250 ... 1.8210 ... 1.8170 ... 1.8120
While remaining below 1.8355 we look for a return to 1.8120
The rally developed in a slightly different manner than expected but while support at 1.8250 holds we still feel the risk is for a move higher to 1.8355-60 but would expect a cap in this area. Thus only above 1.8360 would call for direct and probably strong gains through to 1.8425 and possibly 1.8470.
We feel that we shall have to wait just a little more for a good selling opportunity but look for this around 1.8350-60. From this peak we expect a decline back to 1.8250 and below. Thus we look for 1.8350-60 to provide a good selling opportunity for a reversal beack to 1.8250 at least and after a pullback all the way fdown to 1.8120.
Elliott Wave Comments:
The continued strength of the British Pound has been impressive and has implied that the daily cycles have found a low much earlier than expected. We have readjusted these in the daily chart above and also labeled the decline from 1.9140 into a three wave decline. Thus we are looking for strength for some while.
Both weekly and daily cycles are bullish but we should consider Elliott Guidelines that imply a test of the Wave (B) which rests at 1.8603. This will be approximate and applying the wave structure in the 8 hour chart below we can identify two potential targets for Wave (v) these being at 1.8565-85 representing a 61.8%-66.67% projection and then 1.8670 being a 76.4% projection.
We suspect this should occur this week and thus watch for a retracement from this region. We favor the 1.8565-85 area.
The entire structure has taken on a sideways pattern and while it is slightly early to be confirmed, there looks to be the possibility of a triangle pattern developing. At this stage it is uncertain whether this is eventually bullish or bearish but we do note that the recent cycle low has not really translated into gains. Thus we are still evaluating the pattern but consider the 1.8355-60 area to be a possible top within this triangle with 1.8130-50 being a possible low. Breaks of either end of this range would likely provoke a stronger follow through.
(c) FX-Strategy Inc 2004
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