At the beginning of January the forecast for 2006 was released (refer to
Annual-06). It is too early to cast the total, it will be done at the end of the year, but it is high time to adjust possible scenarios of movement in the nearest months of the currencies under consideration, as they have reached projected check point. Let me cite quite a small extract from the January annual articles.
“... Further price movement will depend on different data, if, once the trend is reversed (against the dollar*), 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 will be defined with the help of the wave picture and mutual waves correlation. Otherwise the US Dollar decline may last at least
till May, 2007.”
Thus, with the help of the key pulse points method, two possible dates of
the second wave of global correction (B) of [B] (for the yen – wave (B) of [E]) ending were specified in January. In the long run the global correction
[B] may be the
elementary corrective pattern (zigzag, flat), more complicated correction (double zigzag, double combination) or assume more complicated shape of the
extended correction, that is consist of five main waves (horizontal or skewed triangle, triple zigzag, triple three).
For illustrative purpose survey wave counting of monthly charts from the annual analysis is given.
Figure 1. USD/CHF survey wave counting.
(Refer to
Figure C2)
Figure 2. EUR/USD survey wave counting.
(Refer to
Figure E2)
Figure 3. GBP/USD survey wave counting.
(Refer to
Figure G2)
Figure 4. USD/JPY survey wave counting.
(Refer to
Figure Y2)
It should be noted that the method of the key pulse points helps to project possible trend reversal points or their
limit values, that is check points, in which supposed scenario is either confirmed or annulled. It happened with the limit date of the trend reversal point against the dollar in spring this year (refer to
Possible nearest perspectives of the main currency pairs (EWA)
Again we have come to another check point, specified at the beginning of the year. What do we see? Unfortunately, there is no simple
completed movement against the dollar in the chart (refer to Figures 5..8 below).
Figure 5. USD/CHF wave counting of supposed wave
[B].
Figure 6. EUR/USD wave counting of supposed wave
[B].
Figure 7. GBP/USD wave counting of supposed wave
[B].
Figure 8. USD/JPY wave counting of supposed wave
[E].
The reversal point, which theoretically may be considered to be wave
(B) ending, is marked with a black arrow in the last charts. Though further price movement is rather of a corrective, then of an impulsive character. That is why
such scenarios, though still taken into account, are not on the front burner.
Thus, in accordance with the annual forecast (refer to
Annual-06) and current wave picture it is logical to assume that the trickiest corrective wave
(B) is still forming and “...
USD fall may continue at least till May 2007.”
Possible scenarios of expected spring-autumn price reversal in favor of the dollar are given in Figures 9.. 12 below. New check points for this or that variant are also given there (date limit values for projected reversal points).
Figure 9. Possible scenarios of USD/CHF further movement.
Figure 10. Possible scenarios of EUR/USD further movement.
Figure 11. Possible scenarios of GBP/USD further movement.
Figure 12. Possible scenarios of USD/JPY further movement.
I would like to note that any forecast is just a supposition until it is confirmed by real prices movement.
For detailed wave counting on smaller time frames, support/resistance levels and parameters of possible trading plans refer to monthly and daily reports.
Reference
Dmitry Voznuy
forDmitry@yahoo.com
October 28, 2006
The ideas given above are purely informational purpose only. This report was translated by Natalya.
Do not reproduce without explicit permission of Alpari.
