Wednesday March 21, 2007 - 03:23:28 GMT
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Daily Analysis for GBPUSDPrice:
Resistance: 1.9625 ... 1.9654 ... 1.9677 ... 1.9719
Support: 1.9592 ... 1.9560 ... 1.9525 ... 1.9500
Care â€“ but while 1.9550-60 supports there is still room for gains towards 1.9654-77 at least
The break back above 1.9476 triggered strong gains that made it all the way to the 1.9600-35 resistance. We feel this move has not yet ended. Thus while there is room for the correction to extend below 1.9592 to the 1.9550-60 area, as long as this supports there is still room for the upside to extend towards the 1.8654-77 area at least. If this occurs directly without the earlier pullback, then weâ€™d look for a correction from there but the prospect will then be for an eventual test of 1.9742-46.
Break above 1.9504 has triggered a strong rally. If we see a direct test on 1.9654-77 then we could see a correction followed by a move to 1.9742-46 else an earlier pullback would suggest a 1.9654-77 peak. (March 21st)
The strong move higher does suggest we should be cautious about a stronger bearish stance. Should 1.9592 break we could see the downside extend the correction to 1.9550-60 but this should support for additional gains. Thus a stronger bearish stance will require a break below 1.9540-50 and if seen would provoke a sharp reversal back to 1.9500 and 1.9431 at least.
The downside needs to wait but we feel it will begin quite soon with two resistance areas to watch out for â€“ 1.9654-77 and then 1.9742-46. From one of these two areas we expect a stronger reversal lower. (March 21st)
ELLIOTT WAVE COMMENTS
No real move lower yesterday and this does open up the risk of seeing a further ABC pattern higher. The 50% retracement of the decline from 1.9915 rests at 1.9550-60 and 58.6%-61.8% retracement at 1.9600-35. We suspect if there is a third ABC pattern then the 1.9550-60 area is likely to cap.
The warning of a third ABC pattern was timely but the move higher in Wave c has been much stronger than anticipated. The structure of this rally is not clear and much depends on whether we see an earlier pullback to 1.9550-60 in a possible Wave iv that would imply a Wave v around 1.9654. Direct gains would suggest we are still in Wave iii higher with the 1.9654-77 area the likely stalling point.
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