Friday August 6, 2004 - 00:33:35 GMT
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FX-Strategy - www.fx-strategy.com
Forex: Daily forecast for the Euro vs U.S. Dollar 6th August 2004Price 1.2050
Resistance: 1.2075 ... 1.2095 ... 1.2125 ... 1.2145
Support....: 1.2045 ... 1.2020 ... 1.2000 ... 1.1967
A little mixed but overall bearish on the day to 1.1865-1.1900
Yesterday's price action was as expected but occurred in slow motion, taking much longer than expected. It raises two possible wave counts:
(1) Favored: An early move to test the 1.2095 resistance followed by an initial drift lower but accelerating later to reach 1.1930 at least and probably the 1.1865-1.1900 long targeted support.
(2) Outside risk: Further consolidation in early trade followed by a spike higher to the 1.2125-45 area which should hold and cause a decline.
Thus a stronger bullish stance can only be considered on a break above 1.2145 in which case a test of 1.2215 is probable and possibly the 1.2270-00 resistance.
From the two scenarios above we need to establish short positions but have to consider the best level. We do feel a move to 1.2095 is most likely to occur but any sale there should have stops above 1.2145. Once the 1.2020-45 area is broken we would look for losses to accelerate lower towards 1.1930 at least and probably the 1.1865-1.1900 area where we look for a base to form.
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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