Introduction
Yesterday all the European currencies added several waves to the last supposed zigzag, having changed it from a corrective structure to an impulsive one. Due to it we can look at the current wave counting from another side and suppose possible nearest reverse of the many-month trend in favor of the dollar, as the minimum requirements for the completed wave structure of supposed wave (B) are almost fulfilled.
1. EUR/USDFor EUR survey wave counting refer to Annual-07 and Monthly-0407. Refer to Figure 1 for the wave counting draft of this currency on the daily chart.
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Figure 1. Wave counting on the daily chart.
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EUR may be finishing zigzag [y] of Y of (B) forming, getting ready for the reverse of the many-month trend downwards. At least, the wave structure and correlation of the waves inside the zigzag [y] ((c)=~(a)*1.27) and double zigzag Y ([y]=~[w]*0.78) make it possible. In this picture it is clearly seen that waves correlations inside these patterns have reached the optimum values.
It should be noted that the most popular correlation of the main active waves in a zigzag and double zigzag is their equality. Taking into account this natural error this equality is fluctuating between 78% and 127%.
For survey wave counting refer to the next picture.
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Figure 2. Wave counting on the weekly chart.
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On the weekly chart correlation of the waves inside the large pattern of the double zigzag (B) or (X) has also reached the optimum value (Y=~W*0.78). Moreover, the price has approached the historical high, 1.3663, which acts as a resistance level now. Moreover, the first main waves of the supposed correction [B] have reached approximate parity, characteristic of correction ((B) = ~ (A)).
These facts emphasize possible nearest reverse of the many-month trend downwards.
2. GBP/USDFor survey wave counting of this currency refer to Annual-07 and Monthly-0407. Refer to Figure 2 for the wave counting draft of this currency on the daily chart.
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Figure 3. Wave counting on the daily chart.
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GBP has beaten the euro, having changed supposed zigzag to impulse and broken the high of 1991, approaching the high of 1992 at 2.0105.
GBP, as well as EUR, may be finishing zigzag [y] of Y of (B) forming, getting ready for the reverse of the many-month trend downwards. At least, the wave structure and correlation of the waves inside zigzag [y] ((c)=~(a)*0.78) and double zigzag Y ([y]=~[w]*0.618..0.78) make it possible. In this picture it is clearly seen that waves correlations inside these patterns have reached the optimum values.
It should be noted that the most popular correlation of the main active waves in a zigzag and double zigzag is their equality. Taking into account this natural error this equality is fluctuating between 78% and 127%.
For survey wave counting refer to the next picture.
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Figure 4. Wave counting on the weekly chart.
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On the weekly chart correlation of the waves inside the large pattern of the double zigzag (B) or (X) has also reached the optimum value (Y=~W*0.78). Moreover, the price has approached the historical high of 1992, 2.0105, which acts as a resistance level now. Moreover, the first main waves of the supposed correction [B] have reached approximate parity (0.78..1.27), characteristic of correction ((B) = ~ (A)).
These facts emphasize possible nearest reverse of the many-month trend downwards.
3. USD/JPYFor survey wave counting of this currency refer to Annual-07 and Monthly-0407. Refer to Figure 5 for the wave counting draft of this currency on the weekly chart.
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Figure 5. Wave counting on the weekly chart.
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If nearest reverse of the many-month trend in favor of the dollar is quite probable for GBP and EUR, alternate variant, given in Annual-07 forecast should be considered for the yen. This chart is given here with no correction.
Note that real price movement coincides with the three-month old projected movement.
Though this variant is still an alternate one because of a rough USD strengthening in March 2007 (see the next chart).
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Figure 6. Wave counting on 240 min chart.
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This picture shows one of the possible scenarios of wave counting, which reflects an attempt to dovetail the corrective structure noticed during the last month and the possible beginning of a new upward price movement. This expanding wedge is not usual but still quite possible.
However, some analysts say that it is not possible that a diagonal triangle forms as the final wave of the wedge. But practice is still the main criteria. That is why it may be treated as an alternate variant. Let?s see what will happen.
4. USD/CHFFor CHF survey wave counting refer to Annual-07 and Monthly-0407. Refer to Figure 7 for the wave counting draft for this currency on 480 min chart.
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Figure 7. Wave counting on 480 min chart.
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Having formed impulse (c) yesterday instead of zigzag the price stated current forming and possible nearest completion of supposed zigzag [y] of Y. Waves correlation inside the zigzag does not exclude this variant ((c)=~(a)*0.5). At the same time wave (c) may keep forming.
Though survey wave counting of CHF is far from the ideal one unlike EUR and GBP (see the next chart).
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Figure 8. Wave counting on the weekly chart.
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Two possible variants of counting of the initial waves of correction [B] are given in this chart. Wave (B) can choose one of the following variants now: either a truncated double zigzag or triple zigzag.
In the first case some tension is obvious. Though it can be interpreted as power of the coming uptrend. At the same time downtrend completion is not confirmed yet. To form a double zigzag nothing special is required. In case the wave forms as a triple zigzag the correlation with other Europeans currencies will be lost.
That is why both variants should be considered equal before the wave picture clears up.
Note
Given possible trading plans are purely informational purpose only and they should not be considered as trading guides or an invitation to make a transaction.
Reference:
April 18, 2007 Do not reproduce without explicit permission of Alpari Ltd
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