Medium Term Outlook

14.07.2007 Dimo Dimov

The chart presents my long term wave count. It suggests that there was a multi months bullish triangle and the current rise is the movement after its end. It begin at 1.8514 (October 2006) and is developing as a potential terminal impulse (ending diagonal). Such a pattern appears always in the end of a movement so if my suggestion comes true, a reversal of the up-trend started from 2001 year is forthcoming. If I am right, wave 5 of the potential terminal impulse should be very close to its end and a fall below the trendline 2-4 shown on the chart will confirm this idea. In such a case one should expect very sharp and fast fall with a minimum target 1.8514 (the beginning of wave (C)), and much lower thereafter. A key resistance is 2.0617 (at this level wave 3 will become the shortest wave in the impulse which is impossible). The idea for a potential terminal impulse is supported by the MACD indicator because if we see a fall from current levels, a triple divergence will become a fact which is an extremely bearish signal.  

This analysis has only informational and educational purpose and does not represent a proposal for buying or selling currency contracts.