Tuesday August 3, 2004 - 01:30:54 GMT
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Forex: Daily Forecast for the Euro vs U.S. Dollar 3rd August 2004Price 1.2035
Resistance: 1.2045 ... 1.2065 ... 1.2090 ... 1.2120
Support....: 1.1990 ... 1.1975 ... 1.1935 ... 1.1900
While holding below 1.2065 bearish to 1.1935 & probably 1.1865-1.1900
Price was slightly firmer than expected yesterday but has held below the key 1.2080-1.2120 and has led to further losses which tend to put the bullish stance on hold. Only back above 1.2065 would tend to argue for a stronger retest of 1.2090 and 1.2120. If the higher resistance breaks then we would look for strong gains back to 1.2175-95 at least. Further resistance is at 1.2225.
Although yesterday saw price slightly higher than we had preferred we tend to stay with our cautiously bearish view. There could be some early consolidation but this should ideally hold below 1.2065 and a break below 1.1990 would then trigger losses extending down to 1.1935 minimum but we suspect to the 1.1865-00 area where we look for price to stall. Only below 1.1850 would signal follow-through to this year's 1.1760-70 lows.
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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