Tuesday January 9, 2007 - 05:25:36 GMT
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FX-Strategy - www.fx-strategy.com
Daily Analysis for USDJPY
Resistance: 119.05 ... 119.30 ... 119.56 ... 119.87
Support: 118.63 ... 118.40 ... 118.22 ... 117.97
Mixed here and will need to watch key support & resistance though the upside looks limited
The 117.97-20 area produced a good reaction higher which has stalled just below the 119.03 high. Indeed, we find the rally from yesterdayâ€™s low as having a target at 119.05 and therefore it would be best to wait for a break here to look for additional gains. Above 119.05 would allow price to extend to the 119.22-32 area which we feel should cap if seen. Only breach would cause a stronger test of the 119.56 and 119.81-87 areas.
We still see daily cycles as bearish and do not look for a strong move higher. Thus we can only reconsider on a break above 119.32 and 119.87 which would generate targets around 120.47 and 120.82-87. (January 9th)
Still no break of 117.97 but we donâ€™t feel this is too far away. There is resistance at 119.05 and this may hold but we should allow for 119.27-32. Overall the downside appears to have more potential but there is a risk we may have to wait for a larger break lower. Thus watch support at 118.20-40 then the 117.97 low and only breach would extend the downside to 117.57-72 at least and we suspect down to the 116.27-68 area.
The losses appear to be in line with daily cycles and we still look for additional losses but we should be cautious of initial consolidation before this extends to 116.27-68 at least â€“ potentially further. (January 9th)
ELLIOTT WAVE COMMENTS
We feel the 117.97 low is Wave (a) and thus we have either seen Wave (b) complete at the 50% retracement at 119.05 or it is part of a complex correction. Any drop below 117.97 and the 38.2% expansion at 117.57 would extend losses to 117.05 (50% retracement and probably the 138.2% projection in Wave (c) at 116.68.
What is a little unclear is whether the 114.42 low was a Wave (a) to be followed by losses to a new low (which weâ€™d prefer) or whether this will turn into a sideways consolidation. Thus we shall continue to monitor here.
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