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Fig.Y1. Survey wave counting. Variant 1.
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The wave picture of the Japanese yen doesn’t rule out that the global horizontal triangle IV will continue to develop and to complete it the price supposedly needs to complete forming of the ending zigzag [E] of IV.
It is fair to say that if the price breaks the upper critical level (drawn by the top of wave [C] of IV) it may lead to substitution of the triangle for a triple three without principal change of the further expected price movement (see tables 3.1 and 3.2 of my book).
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Fig.Y2. Wave counting on the monthly chart. Variant 1.
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Fig.Y3. Wave counting on the weekly chart. Variant 1.
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Supposedly wave (B) of [E] of the triangle is completed. But the wave structure on the smaller time-frames allows the price decline to the 103.91 mark before a large upward trend starts (see the article Possible Trade with an Excellent Profit/Risk Ratio).
At the same time the completion of the last downward diagonal structure allows to suppose that the upward trend of the dollar’s consolidation may be much more large-scale that it is supposed in scenario 1.
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Fig.Y4. Survey wave counting. Variant 2.
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In this case we have to deviate from the already customary downward global impulse and to adjust the general wave counting of the yen to a corrective form. If the supposition is true then a global double or triple three, and not a global impulse, is developing with a double upward zigzag x.
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Fig.Y5. Wave counting on the monthly chart. Variant 2.
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Fig.Y6. Wave counting on the weekly chart. Variant 2.
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Then after a large horizontal triangle [X] of x, which is almost completed, we should expect the ending upward zigzag [Y] of x, comparable by size with zigzag [W] of x.
But if the price adds on the ending downward zigzag [v] in Figure Y6 of diagonal triangle C of (E) to an impulse (having added only a pair of downward waves of corresponding structure), the whole downward price movement in the second half of 2007 may be easily presented in the form of a downward wedge (see Figure Y9, below), that may dramatically change our expectations (see Figures Y7..Y9, below).
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Fig.Y7. Survey wave counting. Variant 3.
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Fig.Y8. Wave counting on the monthly chart. Variant 3.
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Fig.Y9. Wave counting on the weekly chart. Variant 3.
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In fact a wedge is always a forerunner of a new trend, to which it sets the direction. In this case it isn’t ruled out that horizontal triangle completed in the middle of 2007. And now after the completion of the wedge and a modest upward correction the dollar’s decline may again continue with a new strength. The 103.91 level considered in the article Possible Trade with an Excellent Profit/Risk Ratio is critical for the completion of the wedge.
I hope the forming wave structure will prompt in advance which scenario the price will choose.
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 daily analyses or in additional articles in Wave analysis.
It should be remembered that EWA forecasts show probable price movements.
Abbreviations
«Annual-08» — «Annual Wave Analysis, 2008»
«Monthly-1207» — «Monthly Wave Analysis for December 2007»
«Daily-280406» — «Daily Wave Analysis for 28.04.06»
Reference
Dmitry Voznuy
forDmitry@yahoo.com
January 20, 2008
When using any part of the article for publication or analytical materials reference to the author and Alpari is obligatory.
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