Wednesday September 29, 2004 - 01:02:08 GMT
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Forex: Daily Forecast for the British Pound vs U.S. Dollar 29th September 2004 Price: 1.8120
Resistance: 1.8145 ... 1.8160 ... 1.8190 ... 1.8235
Support....: 1.8110 ... 1.8085 ... 1.8060 ... 1.8025
While acknowledging the chance of a rally to 1.8190 we feel the larger risk is lower
Further gains were seen as expected to the 1.8125-45 range and also just above to 1.8160. However, with targets being met and a bearish divergence developing we feel that the upside is now limited at best and may not even occur now. To generate one last test higher that could reach the next resistance target at 1.8190 we need support at 1.8100-10 to hold and cause a break back above 1.8135-45 to extend gains to 1.8190 which we feel will hold and cause a reversal lower. Further resistance is at 1.8235.
With targets met - and only marginally exceeded - we feel the greater risk is for a decline which could be quite sharp. The key to direct losses is the rising wedge support at 1.8100-10 and loss here and then at the 1.8085 corrective low would allow losses to extend down to 1.8000-25 which could allow a small pullback but be aware that losses after a rising wedge can be quite sharp. Further support is found at 1.7945 and then 1.7900. Any early test of 1.8190 should provide a good sellingh= opportunity.
Elliott Wave Comments:
20th September 2004
Since the last update we have seen quite a volatile move with the decline in Wave -b- dipping slightly more than anticipated to 1.7738 but with the subsquent rally also quite deep to 1.7970. This leaves us with two scenarios:
(1) That Wave -c- will complete a Zig-zag that should see completion between 1.8065-1.8110, and:
(2) That we see a triangle develop with a Wave -c- peak already seen at 1.7970 and this should be followed by a decline in Wave -d- down to the 1.7795-1.7805 area.
We shall watch this and update as price develops during the week.
27th September 2004
The first scenario described last week proved correct with price reaching the mid point of the 1.8065-1.8110 area suggested. The rally on Friday from 1.7945 to 1.8093 may well have satisified this target but only a dip below the 1.7980-00 Fibonacci retracement areas would prevent a second attempt higher to the favored resistance area around 1.8125-45 which represents around a 76.4% -85.6% projection in Wave -v- that also matches a 138.2% projection of Wave -c-.
Any earlier dip below 1.7980-00 would test the Wave -iv- low at 1.7945 and break there would confirm further losses.
(c) FX-Strategy Inc 2004
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