20 June 2001, 09:59  TECHNICALS-Forex market views and key levels

NEW YORK, June 19 - The following is a selection of comments on important technical developments in the foreign exchange market. PETER REHMER, TECHNICAL ANALYST, ELLIOTT WAVE INTL.
EURO/DOLLAR: "The euro looks like it's put in the big low that we were looking for last week. There's a little bit of ambiguity in this month's wave pattern, but the odds are that it's now headed up to 93 cents over the next few months. The short-term pattern is confirming that the trend is up, in that the pattern from last Friday's high is a distinct three-wave decline, which is corrective. It could still dribble down to 85 cents, but it has put in enough of a short-term correction in the past three days. And since the larger trend has turned up, you need to respect any sign of strength. The next leg within the larger advance should be a potent, sustained third wave. There's a similar ambiguity in dollar/Swiss, which has probably topped.
TRADE WEIGHTED DOLLAR INDEX:
"The cleanest, loudest clearest pattern in favor of the dollar going down is in the trade weighted dollar index, which is at 15-year highs. "The long-term uptrend from the 1992 low at 78.19 is not over yet. The top we put in last week is just an interim top. It's a b-wave top within an ongoing triangle from last October. Big picture the dollar index is likely to head choppy swinging sideways to complete this triangle for the rest of the year and then thrust up above 121 one final time to complete the whole move off the 1992 low. And that's when the dollar is likely to be subject to its come-uppance that a lot of people have been talking about in recent years. It is getting extremely vulnerable big picture, but it's just not there yet. "I need to see three big swings in the contracting triangle, and once we have those and the subsequent thrust to a new high, then I'll jump up and scream that a long, long-term top is in place. In the coming months, while the euro staggers up to 93 cents, the dollar index is likely to drop from current levels around 118.70 to 113.30-111.
DOLLAR/YEN:
"It looks like the low at 118.30 from June 1 was the end of a second wave correction and that means the subsequent rally from June 1 is potentially the beginning of a huge third wave uptrend. I'm essentially looking for a move eventually up to 160. And this next leg of that move could easily go to 140-148. It's a really bullish wave juncture. Short term it is likely to be consolidated above 121.80 this week, then forge a little higher and that will complete the initial impulse off the June 1 lows.
EURO/YEN: "The picture in euro/yen fits - it's put in an important low and it's heading up strongly. There's a very distinct, attractive cluster or target resistance around 127.60-129."

J.P. CHOREK, TECHNICAL ANALYST, CHOREK.COM
EURO/DOLLAR:
"The wave (ii) correction from $0.8672 continues to progress lower, knocking out the $0.8571 (.382 of $0.8408-0.8672 wave i) support. Penetration there opens the door for a run at $0.8509 (.618). Adjustments to the one-week cycle have it bottoming late today. So, once prices move toward $0.8509, we should see a sharp upward reversal in wave iii. A move above congestion from $0.8603 to $0.8645 will confirm the bull's return."
DOLLAR/YEN:
"The bull stretched up toward the bottom of the 123.78/124.04 resistance zone on back of waning momentum. Patterns suggest that we will indeed have to sit through a minor corrective period before the bull gets back on solid footing. With prices oscillating around the upper boundary of the bull channel, a correction now will better maintain the trend. The rise from 120.79 is wave .5 of i; it has formed a diagonal triangle pattern. A break of the 122.68 reaction low will be the first confirmation that this pattern ended at 123.75, with wave ii now working lower. Secondary support is at 121.92 (.618 of wave .5) and a break there will clear the way for a move into the 120.79 (wave .4 low) to 120.36 (.618 of wave i), where the bull will be better suited for a massive run higher.
STERLING/DOLLAR:
"The wave iv decline from $1.4075 is now testing support at $1.3934. This level marks the .382 retracement of the $1.3705-1.4075 wave iii rise, a logical target for a fourth wave. As long as this area holds, we should expect a rally in wave v to quickly carry above the $1.4075 wave iii high. Any sustained break of $1.3934 would shift me to an alternate view that labels the decline from $1.4075 as a wave ii correction (its implication is a test of $1.3830, .618 of $1.3678-1.4075).

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