Alternate but Real Weakening of the Dollar till the End of the Summer (or the End of 2007)

Introduction

Yesterday GBP broke the critical level of the main variant of wave counting. This fact is a unique signal of the scenario change for GBP only. Though it is possible that we observe the beginning of a new stage of great USD weakening till the end of summer or even the end of 2007. At least, the current wave counting of the main currency pairs supposes such a variant is possible.

That is why two possible scenarios of USD weakening are considered below. These variants are gaining momentum.

1. EUR/USD

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It is possible that the second part Y of supposed double zigzag (B) or (X) is assuming the shape of the triple zigzag. In this case its completion is possible above the key pulse point at the end of August. The area of the projected values is marked with red-yellow ellipse.

Moreover, if this triple zigzag Y is treated as a diagonal triangle (this scenario is not considered here) price should not overcome 1.4063.

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The next alternate variant, specified in Annual-07, supposes that wave (B) or (X) is assuming the shape of the triple zigzag. In this case its completion should be expected after the end of 2007 and the area of the projected values should be calculated once wave XX of (B) completes.

2. GBP/USD

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According to this variant the second part Y of supposed double zigzag (B) or (X) is assuming the shape of the triple zigzag. In this case its ending may be expected above the key pulse point at the end of August. The area of the projected values is marked with red-yellow ellipse.

Moreover, if this triple zigzag Y is treated as a diagonal triangle (this scenario is not considered here) price should not overcome 2.0569.

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3. USD/JPY

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Scenario given in Figure 5 is the main one at the moment. Supposedly, wave [a] is almost completed and in the nearest future downward wave [b] of 3 of C forming is expected. This wave ending may be expected above the key pulse point at the end of August.

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According to the alternate variant wave (B) is assuming the shape of the running or extended flat, which wave B is almost completed. In this case completion of supposed wave C of (B) should be expected after 2007, its length may make from 78% to 127% of wave B of (B) length.

4. USD/CHF

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Wave Y of (B) or (X) may be assuming the shape of the horizontal triangle or triple three, turning wave (B) into a double three. In this case completion of this triangle may be expected above the key pulse point at the end of August. The area of the projected values, specified through correlation of the main waves of a triangle, is marked with red-yellow ellipse.

Moreover, if we treat wave Y as a horizontal triangle only price should not fall below 1.1993.

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According to the next alternate variant currently double zigzag Y of (B) may be forming, its wave [x] of Y is assuming the shape of the horizontal triangle or triple three. In this case wave (B) ending may be expected after the end of 2007, the area of the projected values should be calculated once triangle [x] of Y completes.

5. USD/CAD

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Supposed USD weakening may affect CAD. In this case chances of the earlier considered alternate variant increase greatly (see article Possible CAD Weakening till the Mid of 2009 ). Supposed wave [A] may complete above the key pulse point at the end of August. Though the area of the projected values for impulse [A] completion should be calculated once wave 4 of (5) of [A] is completed.

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According to the next alternate variant continuous forming of supposed wave 4 of (5) of [A] should be expected, global impulse [A] should complete after the end of 2007. The area of the projected values for impulse [A] ending should be calculated once wave 4 of (5) of [A] is completed.

Supplement (June 25, 2007)

Thus for each currency pair under consideration three possible variants are almost equally probable.

For EUR/USD:

the previous main one, described in the daily forecasts recently (e.g. see Daily-220607),
alternate and
alternate 2, considered here.

For GBP/USD:

preliminary, described in the daily forecasts recently (e.g. see Daily-220607),
alternate and
alternate 2, considered here.

For USD/JPY:

the main, described in the daily forecasts recently (e.g. see Daily-220607) and
alternate, considered here.

For USD/CHF:

the previous main one, described in the daily forecasts recently (e.g. see Daily-220607),
alternate and
alternate 2, considered here.

For USD/CAD:

the previous main one and
alternate, described in Possible Weakening of CAD (USD/CAD) till the Mid of 2009 and
alternate 2, considered here.

Each variant has some advantages and disadvantages but they are quite realizable.

The previous main variant for the European currencies is doubtful as it has been already annulled for GBP and there is a steady trend for EUR and CHF price to move towards the critical level in the impulsive mode.

The alternate variant described here for the European currencies is quite good especially if the mentioned but not described variant with the diagonal triangle is realized. But combination of the constitutive waves of a smaller degree in the shape of the double and triple zigzags in the supposed double zigzag is quite rare.

At the same time the wave patterns tend to be symmetrical in their external shape and from my point of view the variant «alternate 2» is the most symmetrical one among the alternate variants. Moreover it is quite obvious that at the very beginning the direction and shape of the price movement within the variant «alternate 2» may coincide with the movement in accordance with the «alternate» scenario.

That is why in the daily forecasts for the European currencies I will consider the variant «Alternate 2» (for USD/JPY — «alternate») as the most preferable one.

Note

Given possible trading plans are purely informational purpose only and they should not be considered as trading guides or an invitation to make a transaction.