Friday November 17, 2006 - 04:07:52 GMT
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FX-Strategy - www.fx-strategy.com
Daily analysis for USDJPY
Resistance: 118.41 ... 118.58 ... 118.85 ... 119.12
Support: 118.00 ... 117.75 ... 117.40 ... 117.00
We still favor range trading here but take note of break levels
Price action continues to be exceptionally choppy and we continue to advise care with this currency pair. The clearest pattern is an expanding triangle which would suggest continued choppy gains to 118.40 and 118.85. However, while the 118.85 area caps there risk is for a pullback lower. Thus a stronger bullish stance will require a break above 118.85 and if seen would trigger gains back to the 119.75-87 area.
The wave structure is particularly complex here. Above 118.85 is required to test the 119.87 high. In turn above here would allow a move to the 121.38 peak which should cap if seen.
Very little downside seen yesterday and we note a mild bearish divergence but would want to see break of support at 117.75 before acting on this. Thus a break here would allow a dip back to the series of pivot support areas around 117.40-45 and 117.20 and again at 116.95-00. Only below the lower support would trigger stronger losses back to the 116.54-65 lows initially and possibly down to 116.07.
The picture is looking more bearish now and if we see a dip to 116.54-72 followed by a recovery to the 117.67-85 area then we would expect to see a stronger decline down to 113.95. (November 13th)
ELLIOTT WAVE COMMENTS
The only pattern which currently appears to make any sense here is an expanding triangle. It is an unusual pattern and thus we need to observe with caution. However, if we see a peak around the 23.6% expansion point at 118.85 (to complete Wave ^d) and a move back lower in Wave ^e, then the next move should be higher.
Else any decline below 117.00-12 would appear to suggest that 118.58 was a Wave (ii) and this would suggest a move to the 138.2% projection at 113.95.
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