Sunday August 1, 2004 - 14:37:13 GMT
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Forex: Daily Forecast for the Euro vs U.S. Dollar 2nd August 2004Price 1.2020
Resistance: 1.2030 ... 1.2060 ... 1.2090 ... 1.2120
Support....: 1.1990 ... 1.1975 ... 1.1955 ... 1.1935
While holding below 1.2060 bearish to 1.1935 & probably 1.1865-1.1900
The expanding triangle indentified on Friday forced a new high at 1.2120 and a sharp decline lower. Although we are frustrated to have missed this second rally we still see the broken weekly trend support as a restraining factor for any bullish view. Thus we would have to see a rally back above 1.2060 and 1.2120 to cause any stronger move higher. If seen, next resistance levels are at 1.2190 and 1.2225. Any decline to 1.1865-1.1900 would provide a good buying opportunity.
The expanding triangle forced a new high at 1.2120 on Friday and although we missed this, along with the break of the weekly trend support we retain a bearish stance for today at least. This should keep price below 1.2060 and allow losses to extend down to 1.1975 which could cause a brief pullback but we look for a fuller decline to 1.1900 at least and see some risk of a move as deep as 1.1865. However, this coming decline should complete the entire move lower from 1.2460.
Elliott Wave Comments
2nd August 2004
We re-organized the wave count lower on Friday and were frustrated to have the final leg of the expanding triangle move up to the 61.8% Fibonacci retracement of Wave -a- at 1.2120. We now have this as Wave -b- and can generate targets for Wave -c- (and thus Wave -v-) at 1.1900 at least and we suspect at 1.1865. This should complete Wave -A- lower and prompt a correction higher to the entire decline from 1.2460.
Given the position of the prior weekly trend support and the weak daily cycles we do not think the correction should move very high. A 38.2% correction from 1.1865 would see resistance at 1.2080. We will watch how this correction develops - if in 3 waves we would count this as Wave (a) or Wave -B- only. Again, given the weak upward daily cycles we feel this could cause a move down to 1.1865-1.1900 at least but quite possibly down to 1.1760-70 in an expanded flat correction. This would then imply a second rally to the 1.2080-1.2120 area in around 2 weeks time.
(c) FX-Strategy Inc 2004
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