NEW YORK, July 2 - The following is a selection of comments on important technical developments in the foreign exchange market.
JIM CHOREK, TECHNICAL ANALYST, CHOREK.COM:
EURO/DOLLAR: "The bear remains in control of all degrees, intermediate-term and lower. A move below $0.8408 is a matter of time, and will open the door for a run at the .8370 November 2000 low. "The new wave count places a wave (iv) label at the recent .8659 high. That means the decline from there is wave (v) of of B. It has room to test the origin of wave A at .8225, but it must first knock out the .8370 reaction low. Given that we are in a fifth wave, we do have to be on guard for reversal once below the .8408 wave (iii) low. In the micro term, resistance at .8516 should hold back the low momentum correction from the June 27 low of .8427 (.382 of .8659-.8427), but only a move above .8570 (61.8 percent retracement) would damage the bear. Bottoming hourly momentum indicators come when the 1-week cycle is bottoming. But so far, rices have not responded much, keeping gains from the .8427 to a minimum. Once indicators push to the neutral zone, the bear will be in a better position to resume. This will likely occur Tuesday when the one-week cycle should top."
DOLLAR/SWISS: "The best wave interpretation labels the gains from the 1.7571 Swiss francs as a developing wave C. A move above the wave "A" high at 1.8075 is a matter of time. Penetration there will leave the bull aimed at the 1.8183 November 2000 high. In the very near run, the low-momentum action from the current 1.8030 high will probably hold above 1.7855. It marks the 38.2 percent retracement of the gains from 1.7571, but only a move below the 61.8 percent retracement at 1.7746 would damage the bull. That is very unlikely, so look for a move above 1.8075 to clear the way for a run at 1.8183."
DOLLAR/YEN: "Sentiment may already be at an overly pessimistic stage, as the bull is running out of steam in front of the 125 yen psychological round number resistance. There's a good chance that the next big move will be lower in a move that will better maintain my broader bullish view. But only a break of the 123.22 low would confirm a notable decline. Until then, we have to respect the bull. The short-term bull trend remains in control, but I am concerned that the leg up from 123.69 will not be able to push to a new high. Still, only a break of the 123.22 reaction low would put the bull on hold, shifting the short-term trend into a downward correction." "Wave patterns suggest that we must be cautious now that we have a new trend high. The rise from 123.22 is wave ".v" of ".5" of "i." There's a chance that it ended at 124.98, but only a break of 123.22 (wave .4 low) would be solid evidence. Right now, patterns suggest that that will happen in the near run. Then we will be able to target the 120.82 (61.8 percent retracement of 118.26-124.98) to 120.79 (wave .4 low) support. The 1-week cycle bottomed at the 123.22 low. Hourly indicators are rising but approaching overbought territory, a sign that a sharp downward reversal could come at any time... which will better maintain the broader bullish trend."
JOSEPH KLETTNER, TECHNICAL ANALYST, COMMERZBANK:
EURO/DOLLAR: "Now that support at $0.8533 was violated last Thursday, we must view the rally to .8661 on June 27 as the completion of a 3-step a-b-c countertrend rally, not the beginning of a short-term uptrend. Thursday's penetration of support at .8533 following the double tops the EUR left behind near .8660 suggested that the rally off the June 11 low of .8411 was not the beginning of an uptrend like we had assumed. on June 13th when the advance from .8411 penetrated the June 11th pivot high of .8540 and the declining 45 degree trendline at .8580. Even though support at .8533 was violated on Thursday, the 3-day swing chart is still bullish but we suspect that it will eventually turn bearish once the decline makes its way below .8411, the last pivot low on the 3-day swing chart. We suspect that this level will be taken out soon once the bounce from .8434, Thursday's low fails to get through this week's resistance at .8548/84. Once through .8411, the only support left before the market tests last year's low of .8228 is .8360 which is where the lower 2 percent trading is at (today's) opening. The only way the euro can avoid a decline below .8411 is by having the rally from Thursday's low continue through resistance at .8584."