GBP/USD Daily Forecast 25.01

25 Jan 2008

GBP/USD - 1.9780 -

Resistance: 1.9782 ... 1.9810 ... 1.9850 ... 1.9889

Support: 1.9735 ... 1.9686 ... 1.9657 ... 1.9610

Hourly chart with indicators

Bias:                     While 1.9782 caps there should be a pullback to around 1.9678-86 before higher to 1.9889-00

Daily Bullish:       The break above 1.9550 and then 1.9590 high triggered gains all the way to 1.9771 and just above with resistance also at 1.9782. Take care here as this could cause a pullback all the way back to the 1.9678-86 area (max 1.9657) from where I feel we should see further gains back to the 1.9782 high and follow-through to 1.9889-00 which again should cause a pullback. Only a direct move above 1.9782 would see a test of 1.9889-00 directly. Stronger resistance is at 1.9954.

MT Bullish:         I’ll take the 1.9335 low as the end of this part of the decline and this should lead to a week or so of upward correction towards 1.9954 and at most 2.0083. However, that area should cap. (23rd January)

Daily Bearish:     Gains have been seen as expected from the 1.9335 low which have progressed well to target. A selling opportunity should come before too long. In fact, where price is right now while I’m writing the 1.9782 area has a good chance of causing a pullback below 1.4740 and 1.4705 towards the 1.9678-86 area. I suspect this will support – at the most 1.9657. Therefore, any further losses will require breach of 1.4650 and if seen would suggest room for follow-through to 1.9558 and possibly 1.9463-95.

MT Bearish:       I am taking the 1.9335 low as the base for the correction higher – even though the relationships are a bit loose. Thus only below 1.9335 directly would extend losses to 1.9254 and 1.9188. (23rd January)

ELLIOTT WAVE COMMENTS

Elliott Wave Comments

23rd January

The spike down to 1.9335 was very frustrating but with bullish divergences in the 4 and 8 hour charts I suspect that was the end of Wave –v- and thus the end of Wave (c) of Wave (iii).

If this is the case then the normal corrective ratios would imply a 41.4% retracement in Wave (iv) at 1.9954 and 50% at 2.0083. Given Wave (ii) was quite deep I suspect the 1.9954 area will hold. If this occurs in 3 waves then we should allow for a more complex correction – which I feel will occur.

Only directly below 1.9335 would resurrect the 1.9188 and 1.9122 targets.

25th January

Progress is being made with a 138.2% projection in Wave c at 1.9889 and a 161.8% around the 1.9954 target.

I. Copsey