Wednesday July 21, 2004 - 01:43:31 GMT
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FX-Strategy - www.fx-strategy.com
Forex: Daily forecast for the Euro vs U.S. Dollar 21st July 2004Price 1.2325
Resistance: 1.2355 ... 1.2385 ... 1.2400 ... 1.2420
Support....: 1.2300 ... 1.2265 ... 1.2225 ... 1.2205
Initially recovering to 1.2385-00 at least then lower
Break of 1.2375-80 appears to suggest the strong probablity that the upside is complete. Having said that we tend to look for an initial rally that should reach 1.2355 at least and we suspect the 1.2385-00 area. However, we feel this may well provide the limit for any upside. Thus, only a break of 1.2400-20 would provoke a renewed attach on the 1.2460 high and probable follow-through to the original 1.2530-50 target where a cap is expected.
Break of 1.2375-80 looks bearish but of course we have still yet to break the 1.2300 corrective low. We tend to look for a recovery in the first half of trading today with 1.2355 expected at a minimum but we suspect deeper to 1.2385-00. However, while these resistance areas hold we look for break of 1.2300 which should allow a dip to 1.2265 whihc may cause a temporary pullback but we expect eventual loss for the pivot support at 1.2205-25 at least. Further support is found in the 1.2140-80 congestion area.
Although we had begun to think we had seen the start of the move lower last week, the failure to move below 1.2265-00 caused us to re-evaluate the shorter wave count and label the rally to 1.2425 as Wave a and the low last week at 1.2300 as Wave b. This has generated a cluster of measurements that target the 1.2540-50 area as a probable peak, least of all that 1.2540 represents a Wave [v] projection of 76.4% which also matches the 261.8% projection of Wave (c).
Thus on a move below Wave b at 1.2300 and then the Wave [iv] at 1.2265 would imply a logical move down to the Wave (b) area at 1.1975. This would break the weekly support line and any correction from there should be stunted followed by stronger losses.
(c) FX-Strategy Inc 2004
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