Dialogue
Client: What is your medium term outlook for dollar/DM in 1996?Broker: Dollar/DM broke above 1.4435 in December 95 But the impetus was weak.
CL: Resistance at 1.4580 was too dense for it. Wasn't it?
Br: Yes, you are right. But the subsequent retracement from this area has allowed the market to build strength for
another assault on the upside. Cl: What could be a possible target area of the assault?
Br: A break above the 1.4545/80 zone is likely over the coming month, it may trigger a rally to 1.5045 initially. Cl.: Thus the medium term objective remains 1.56/1.58. Br.: That's right. Dips should continue to find good support in the 1.4280/65 band. Cl.: What can you recommend?
Br: I would advise you to hold longs, adding on dips to 1.4340/00, keeping the stop/reverse below 1.4265/60. CL: Shall I cover longs?
Br.: Cover longs on rallies to 1.4545/80, reinstating on a break. Cl.: Is there any danger of a correction? Br.: Loss of 1.4265 will signal a deeper correction towards the 1.40/1.38 area. My advice is: reinstate longs here, stop/reverse below 1.37.
