Introduction
On large time frames it is quite difficult to analyze and predict price movement, as we have authentic data only within the last 30-35 years (sometimes even less). It restricts precision of evaluation of the current situation and forecasts precision, especially on large time frames.
As for the wave analysis relative price movement character is the main distinct feature of the FOREX market, which impacts global wave picture of currency pairs. A chart of any currency pair reflects the strength of one currency against the other.
Permanent “forward and upward” movement is hardly probable (comparing with the stock index, where weak stocks are placed by strong ones). It is more probable that the cross rates of the main currencies are in the
permanent global correction, forming a complicated many-year corrective structure and increasing the quantity of such waves counting. Within this structure different combinations of Elliott's patterns may be distinguished, they make it possible to analyze current situation and forecast further prices movement.
Moreover, peculiarities of the FOREX market, which have impact on the inner wave patterns structures, are:
high marginality,
currency interventions,
twenty-four-hour trading within the business week.
Current Situation in the FOREX Market
Last year it was supposed (e.g. in
Annual-05 (in Russian)), that price movement against the US Dollar may continue at least till 2010. Moreover, in
Annual-05 (in Russian) it was forecasted that correction with depth about 38%-62% of the previous many-month movement would begin in 2005. This correction will last at least till
March, 2006. Forecasted correction price depth was adjusted several times last year.
2005 forecast was confirmed. The US Dollar steadied within 2005 (from January to the end of the year).
This correction movement may be not completed yet, though judging by its wave structure, duration and depth, we may suppose that expected reversal point will be just a local high/low within the forming correction, not the final high/low of the whole correction. Though this high/low may have been formed already (for the European currencies – in November, for the yen – at the beginning of December, refer to Figure 1 in
Depth of the Current Retracement will specify further price movement (in Russian).
It is difficult to compose EWA for 2006 as:
- It is not confirmed yet that movement in favor of the dollar, begun in January, 2005, has been completed. That is, the first high/low of correction (A)or(W) may be either projected point in March or the point in November-December, 2005.
- Trend reverse, expected in March, 2006 is still a supposition, that is one of a variety of possible scenarios.
- here is no data point to forecast expected prices movement against the US Dollar (supposedly, after March, 2006).
Thus, there is neither confirmed pivot point, nor first waves of a new trend, which could make a hint at further price movement direction.
Currently expectations of reverse of the trend against the dollar
at the middle of March, 2006 still prevail. Further price movement will depend on different data, if, once the trend is reversed, completed three-wave pattern forms
by November, 2006, its high/low may be the second high/low of many-month extended correction. In this case further prices movement may be defined with the help of the wave chart and mutual waves correlation. Otherwise the US Dollar decline may last at least
till May, 2007.
I took the opportunity and revised the wave counting once again. I tried to simplify it without loss of inner wave structure and common sense.
In this article possible variants of renewed waves counting of higher degrees and their perspectives in 2006 are described.
Addition of April 10, 2006
Possible nearest perspectives of the main currency pairs
Note
This report reveals the analyst opinion of the situation at the moment of its release. This report is subject to change, it will be reflected in monthly and daily analyses.
It should be remembered that EWA forecasts show the probable price movements.
Reference
Dmitry Voznuy
forDmitry@yahoo.com
January 8, 2006
The ideas given above are purely informational purpose only. This report was translated by Natalya.
Do not reproduce without explicit permission of Alpari Ltd.
