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HARMONIC ELLIOTT WAVE

Friday, February 27, 2009

Dollar-Yen & the Yen crosses should lose out today

This week has been a tough one to forecast so I’m pretty glad the weekend has arrived to have a break. Having said that, while the bias calls have not been particularly good the break levels have provided a few good trades and when filtered with trade set ups as seen on http://www.fx-forecaster.com/DailyForecast.html the results have shown a remarkable 80% winner set up ratio. I do therefore recommend that these are viewed to assist in filtering the trades.

I am a little upset since a couple of the calls yesterday were just about right but the set ups were not complete – in Cable and Euro-Yen. These have already been triggered this morning before being able to pass on this advice but do therefore look for the Yen crosses to be weak today and for the Dollar to strengthen against the Europeans.

In particular Cable could be the big loser while I feel the Euro and Swissie will suffer less from any Dollar strength. The resistance line in the Swissie (given by the prior support line) is now closer to 1.1775-00 and I feel this could be tested for a third time. On the assumption that the Euro does not move below 1.2512 I feel this may well be the end of the Dollar strength against these two. Cable has more of a look to continue its losses over the coming few weeks…

Dollar-Yen frustrated but certainly did not complete any selling set up and pushed through 98.00 to reach 98.70. My target had been at 99.05 but it does seem as if the peak has been seen at 98.70 with a sharp drop already this morning. This should provide a day or two of weakness before it can recover again. With the expectation that the Dollar could be firm against the Europeans it does highlight the downside potential in the Yen crosses.

The Aussie remained in a range but this morning’s break below 0.6450 opens up a minimum target at 0.6330-50. It should hold on first test and cause a drift back higher. We’ll have to see how it performs as any drop below 0.6330 would appear further bearish.

Finally Dollar-Canada has been its usual self, caught in a range too, but unless sit can break significantly above 1.2619 the bias may still be on the bearish foot so watch out for a topping pattern there also.

Today’s free analysis is for USDCHF and can be found on
http://www.fx-forecaster.com/DailyForecast.html.

Have a great weekend.
Ian Copsey

Thursday, February 26, 2009

Today looks like another range trading day...

It was another mixed day yesterday. The Dollar’s losses were mostly reversed and against the Pound in quite a substantial way and this impacted on GBPJPY which reversed perfectly from just above the 141.55 resistance I outlined yesterday. There were some decent set ups yesterday that did indicate a few decent trades with the only set back being in Cable where the first pullback was a bit deep. However, overall the opportunities were there. See http://www.fx-forecaster.com/DailyForecast.html.

Where does it leave us? Well, it’s back in the same old trading range again and it seems for the most part this does look like spreading across the board. It probably means we’re in for some choppy trading again that threatens to leave some whipsaw wounds if we’re not too careful.

The rally in Dollar-Yen looks as if it’s closer to a pullback but the break above 97.25 does imply an eventual test of 99.05 within this rally. So any decline does look corrective only but may have potential to the 96.20-40 area once again. This looks like spilling over into the JPY crosses which still sees further corrective downside potential in GBPJPY and should allow a little more downside in EURJPY but not by too much now – the 122.63-123.08 area should provide the base with the main risk still higher to 126.20-50.

In the Europeans I feel that we could see the Euro slide a little more with potential targets either at 1.2600-30 or at most 1.2569. I think this break lower may well get the market bearish but end up as a false break that could end in tears. We have to view the Swissie too as having limited upside potential due to this prior trend support. The move to 1.1741 didn’t quite reach this line for a second time and with it obviously rising we may just see a final attempt which as long as it fails – and I suspect in the 1.1760-83 area – then the downside will beckon.

Elsewhere the Aussie remains choppy and finding hard to sustain breaks while the Canadian Dollar whipped back higher but I’m really not too confident of any sustainable break higher either.

Thus, with this general apathy to sustaining breaks do watch your back and take profits early. If you see a localized set up pattern at one of my support or resistance levels then take profits at the minimum target levels. These have been holding for the past few days so try not to get caught…

Today’s free analysis is for EURUSD and can be seen on
http://www.fx-forecaster.com/DailyForecast.html.

Good luck.

Ian Copsey

Wednesday, February 25, 2009

The Dollar appears to be swing in favor of losses...

The market remains uncommitted in Dollar-Europe but has clearly taken the bull by the horns to take Dollar-Yen higher. This latter event obviously disappointed my bearish cyclic view. As of now I shall not change the longer term view of significant losses but for now it is clear that there is still some way to go in this rally. The double bottom at 87.10 suggests a minimum target at 92.00 but I have some doubts we’ll reach there. For the moment I feel that the next barrier is at 97.02-26 and we’ll have to observe the reaction to gauge the next move. Overall I feel there is room for gains back to the 100.54-75 area at least.

Now, for Dollar-Europe the mixed signals continue. Cable has reacted the least and hasn’t shown any preference for either the upside nor downside. I still have those bearish cycles in the back of my mind and these won’t go away just yet. I suspect we could see a marginal new high but probably it’s still best to trade on breaks.

The interesting event I noticed was the rejection seen at 1.1712 in the Swissie which was given by a prior support line that has now turned to resistance. Today this rests around 1.1725-35 and while there is no break above here it does tend to point to losses. If these break the 1.1460 low – which I’m sure it will – then the next stop is way down around the 1.1289-1.1311 area. This could be a good potential trade.

If the view on the Swissie is right then we have to expect stronger gains in the Euro. Initial key resistance is around the 1.1912-43 area and any break above this would generate follow-through to new highs and this must therefore imply a retest of the 1.3092 high… A break here would tend to suggest we are going to see the Dollar soften for a while within a larger daily consolidation pattern.

So if we want to see a stronger directional move today the Dollar’s downside would be the key…

The Aussie and Canadian Dollars are mixed while the JPY crosses have firmed up considerably. One point to watch is that GBPJPY may have a limited upside with the 143.65 potentially causing a cap. Euro-Yen on the other hand seems to have a slightly stronger upward potential (and I’m looking at 126.17 initially). Given that this may well come from a firmer USDJPY – possibly also EURUSD it does suggest that maybe Cable will be weak but would probably need to decouple itself from the Euro and Swissie. However, do take care here…

Today’s free analysis is for USDJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups which produced two profitable trades and no losses.

Good luck.

Ian Copsey

Tuesday, February 24, 2009

The market once again takes the road of non-decision

I think it was obvious that yesterday I had been caught in between two larger scenarios. I did expect the Dollar to extend its losses just a bit more and this we got and has caused a very deep pullback in both Euro and Swissie – but not quite so evident in Cable.

This latter failure to reverse the gains seen in Cable does cause me some irritation since this is where I have had a strong bearish view. The pullback here did peak out around the levels where I considered the bearish structure would still be valid but the lack of a stronger reversal does give raise to doubts. This must go down quite quickly now to maintain the preferred bearish scenario else there may be a chance we have seen the major monthly cycle low come in much earlier than expected…

I have also had to search hard for a way to fit in the Euro’s pullback to 1.2990. I can see a scenario but what this does tend to mean is that even if we see continued losses the chance we will penetrate the 1.2328 low is getting lower. In many ways the Dollar bearish outlook could hold greater risk. Thus we do need to be on our guard and be open to both sides of the market right now…

With the Dollar’s recovery came that of Dollar-Yen too which reached 94.93. There is no real sign of a slowing in momentum as yet but it remains a possibility to watch out for. The crucial support here is at 94.05-10 and while this holds we can still see a new high with the high-risk area where a reversal needs to establish itself being between 95.31-41 and 95.87. If it gets any higher then I’ll have to eat humble pie and question the extreme bearish outlook I have carried.

This uncertainty is also reflected in the JPY crosses which I still find rather clouded in respect to the wave structure. There is some suggestion of additional gains in Euro-Yen and yesterday’s break above 136.36 adds to that feeling. The problem I have here is trying to sort out the correct structure which has been throwing off the projections. Therefore I wasn’t to approach this cautiously too.

The Aussie looks very similar to the Europeans in terms of its ambiguities but still basically holds a bearish structure while Dollar-Canada has had its share of unexpected moves but if anything I remain bullish…

Today’s free commentary is for GBPJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html. Please also look at yesterday’s set ups which saw two profits and one loss…

Good luck.

Ian Copsey


Monday, February 23, 2009

The week starts off with the Dollar on a weak note...

From today I shall be posting to http://www.fx-forecaster.com/DailyForecast.html the set-ups for the potential trade levels indicated in the previous day’s report. Friday’s trade set-ups have already been uploaded. I hope this provides some help to those who are still new to trading.

As for the market... well, I would like to forget Friday. The only redeeming factor was that of all the highlighted potential trade levels only two clear set ups were seen which should have both returned a profit. There were two less clear set-ups which if taken would have also made profit. All other levels didn’t see any successful trade setups completed.

I am very much in two minds in what to make of the sharp losses seen… If I look at the daily charts for the Europeans all three are showing quite mature Dollar bearish divergences. In the Swissie & Euro in particular I find it hard to absorb the move into a Dollar bullish structure. Having said that, as sharp as the move was, it didn’t really break any long term Dollar swing lows. Even if I decided to become Dollar bearish I find this very, very difficult to absorb in to Cable with its cycles still pointing sharply lower.

Therefore I have to consider the potential for a short term consolidation and in that process we’ll need to observe the levels that would suggest that the Dollar has reversed which would indicate that it remains in a long term triangle pattern in the daily charts.

However, I was quite pleased with Dollar-Yen. It didn’t really reach the 94.62 high but the break lower does look consistent with the cycles. Still, even here, it is very early days and there are still key support levels to breach to finally confirm the downside is on its way – and the closest is all the way down at 89.70 – so there is still enough neutral area for the market to explore before finally make a decisive break.

All in all it does suggest a touch of caution today. If I have any preference then it is Dollar bearish but let’s see just how Europe reacts when it opens…

Today's free analysis is for EURJPY and can be seen on http://www.fx-forecaster.com/DailyForecast.html

Have a profitable week.

Ian Copsey

Friday, February 20, 2009

In spite of the deeper correction the Dollar remains bullish

I don’t think very much went right yesterday. Just about all of my reversal levels got hit with the exception of the Swissie. What is more, the reserve resistance in the Euro at 1.2725 was broken but only by 34 points – enough to probably trigger any stop and then push back lower.

However, if I am to point to anything today, the Swissie support holding and the reaction from the 1.2759 high in the Euro are enough to keep me on a Dollar bullish preference. A similar instance occurred in Cable with the break above 1.4345 which extended gains to the upper end of the 1.4408-33 resistance and just tipped over to 1.4445.

Thus the Dollar should resume its uptrend today with the only risk being that it may stay in a sideways pattern. Even this latter scenario would be enough to cause today to be a bullish Dollar day and we’ll take the next step as we see it. The next targets are at 1.1914 Swissie, and probably the 1.2328-60 area in the Euro. Cable needs to push back below 1.4235 to generate follow-through to the 1.4050-92 area again.

Meanwhile the Dollar continued its rally against the Yen, stalling 17 points below the 1.9462 corrective high. However, this rally has caused 4 hour momentum to look a little more bullish so we’ll have to be cautious here. I favor another attempt higher later today towards 94.95-05 and at most 95.30. If we are going to see the larger downside picture resume then this really does need to hold and cause some sharp losses… Anywhere above 95.30 will begin to concern…

Even the Aussie & Dollar-Canada misbehaved… However, I feel they have both seen deeper than anticipated corrections and while it alters the wave structure slightly the picture remains US Dollar bullish and I’ll expect further gains today here also.

The Yen crosses are now mixed. I can see a reason to suggest a high was seen in GBPJPY but I’m not so sure about EURJPY. It’s still early days here but just remember that cycles are bearish and at this point I’m not going to get bullish at this stage.


Today's free analysis is for USDCAD and can be found on http://www.fx-forecaster.com/DailyForecast.html

Have a great weekend.

Ian Copsey

Thursday, February 19, 2009

Dual Moving Averages ... the Market’s Favorite…


Subtitled: Why moving averages are my least favored trading tool


“What moving averages do you use?”

Isn’t that a common question? Is there and answer? Of course, many traders use moving averages. Which are the best periods to use then?

My answer: “Depends on how much money you want to lose.”

I am fascinated by the market’s fascination with moving averages. Why? Am I missing something? I have seen all sorts of strategies using moving averages but have never seen a strategy that is stable and makes steady profit with a low drawdown.

Let’s take a look at a simple dual moving average strategy that simply buys when they cross higher and sells when they cross lower. I used this on a chart of the Euro against the Dollar and to begin with I have limited this to a period of five years from the introduction of the Euro in January 1999.

Just to speed up the process I optimized the two periods which ended up as 9 periods for the short moving average and 35 for the long moving average.

Capital $ 20,000
Leverage 5x EUR 80,000

Total Net Profit 0.4918
Gross Profit 0.8088
Gross Loss (0.3170)
Total # of trades 38
Percent profitable 55.26%

Number winning trades 21
Number losing trades 17

Largest winning trade 0.1046
Largest losing trade (0.0442)

Average winning trade 0.0385
Average losing trade (0.0186)

Ratio avg win/avg loss 2.0654
Max intraday drawdown (0.0908)
As a % of capital (36.32%)

1999 0.0983 39.32%
2000 0.1355 54.20%
2001 0.0396 15.84%
2002 0.0759 30.36%
2003 0.1425 57.00%
TOTAL 0.4918 196.72%

Let’s look at these numbers.

First of all I took an average rate of 1.25 for the EURUSD rate and came to a position size on a 5x leverage of EUR 80,000. This is probably a bit high, but for the sake of examining just how good a strategy is it will suffice.

Well, we have see 55.26% of the trades make profit and the ratio of profit to loss is over 2:1. That is quite good. The total net profit over the 5 years is 0.4918 – so very nearly 0.1000 per annum. Looking at the results for each year we see the lowest return was 15.84% (2001) and the highest was 57.00% (2003). I’d be happy with that. We’ve almost trebled our capital in that time although we would have had to have gone through something like a 36.32% drawdown in capital at some point.

These numbers are good!

So on the 1st January 2004 we can start trading… and these would have been the results since then:

Capital $ 20,000

Leverage 5x EUR 80,000
Total Net Profit (0.0922)
Gross Profit 0.2704
Gross Loss (0.3626)
Total # of trades 27

Percent profitable 22.22%
Number winning trades 6
Number losing trades 21
Largest winning trade 0.0889
Largest losing trade (0.0379)
Average winning trade 0.0451
Average losing trade (0.0173)
Ratio avg win/avg loss 2.6100
Max intraday drawdown (0.1480)
As a % of capital (59.20%)

2004 (0.0073) ( 2.92%)

2005 (0.0416) (16.64%)
2006 (0.0128) ( 5.12%)
2007 (0.0130) ( 5.20%)
TOTAL (0.0747) (29.88%)

Suddenly the numbers don’t look quite so good… Every year has recorded a loss and the maximum drawdown was almost 60% of capital. Only 6 out of the 27 trades made profit over the 3.25 years.

Was there something wrong with the optimization? How could the same moving average periods lose so much money?

I have news… this is very, very common.

The next question is normally “Can I add a money management stop, trailing stop or take profit.”

Of course you can but do remember there are two risks involved. To be honest a money management stop should always be employed. However, there can be a downside in that when set to a level with which you feel comfortable it can actually increase the drawdown. What can happen especially with simple moving average systems is that since they provide a lagging entry signal, the subsequent pullback is so deep it will catch the money management stop. This often takes a loss on a position you may have profited from without the stop and if there are too many of these it can actually cause the drawdown much higher.

Trailing Stops and Take Profit Stops are also valid methods to take more control over positions. Here however you will need to avoid optimizing them. If anything they should be set to a non-fixed amounts but reflect market volatility through using volatility. Optimizing these is not recommended. The more variables you put into your system the more unstable it becomes.

The final question is then usually asked. “Is there any way to more thoroughly check whether the optimization has provided a stable result?”

The answer is most definitely yes. Look at the profit results of all the optimized periods. For example, let’s look at the strategy above. After optimization the moving average periods used were 9 and 35. Each of these should be examined to observe how stable the results are around the optimum period.


Look at the following graphs of results:


On the left are the results of all lengths in the short moving average period from 5 to 12 while on the right are the results of all lengths in the long moving average period from 30 to 40.
Note on the left that around the optimum 9 period average the next best results are around 1,000 points lower and going out to the extremes these move down to 2,000 points lower. Equally, on the right we see a similar result.

It must be understood that when optimizing the chances of seeing profits as high as suggested by the optimum periods are very, very low and thus do not even begin to think that your trading results will be any where close. The best type of result you should be looking for in a type of flat bell curve which sees limited reductions in profit either side of the optimum. Even then, the more variable parameters you utilize the more chance there is of these causing an exponential reduction in profitability in your strategy.

What I have pointed out here with two moving averages is common of a poor strategy but very common using moving averages. They are really not good trading tools.

Ian Copsey

(c) 2009

While yesterday's moves were not all uniform I still look for Dollar gains

What a strange day yesterday turned out to be. There were some good trading levels and the basic direction was correct – Dollar bullish – but there was a strange disparity between performances of each currency pair. The Dollar has by and large seen more gains against the Euro and Pound compared to the Swissie but yesterday proved to be the opposite.

The Swissie was just about text book with the recovery from the 1.1650-60 area and failed just 7 pips below the next intermediate target. However, the Euro and Pound just didn’t seem interested and while there were losses in both the lack of follow-through is intriguing…

Never-the-less, for now I remain Dollar bullish still though we’re not too far from yet another correction. The targets remain the same in the Euro at 1.2443, the Swissie at 1.1914 and the Pound all depends on what the first move is today. However, the 1.4050 area is a decent approximation.

Dollar-Yen surprised with the lack of pullback and the more direct rally. We are now getting to levels here where we have to decide whether it’ll stall just below 94.62 or just above. Right now the hourly momentum conditions are still positive so we should expect a new high but watch out for reversal patterns here once we get above 94.25…

The Aussie has developed a short term triangle but this too is expected to suffer under the U.S. Dollar with losses to 06227 expected. Equally Dollar-Canada bounced perfectly from the 1.2510-30 support but the push higher hasn’t been convincing yet. There are a couple of scenarios here but while the 1.2510-30 area continues to support I still feel there is room for quite a firm rally.

Finally, the Yen crosses are still refusing to go down. This should be their fate but what is proving difficult is just how this will develop. Take care as they’re proving to be choppy but to work with a break lower if seen…

Today's free analysis is for AUDUSD and can be seen on http://www.fx-forecaster.com/DailyForecast.html.


Good luck.

Ian Copsey


Wednesday, February 18, 2009

The Dollar should resume its rally today

Yesterday was had both sides of the expected and unexpected, a few levels that broke but didn’t sustain follow-through and some areas which worked quite well. I was rather surprised with the direct follow-through in the Euro while the Dollar really failed to take advantage of its strength against the Pound…

In all that, quite frankly, the Dollar looks bullish and there is still some way to go. For example the Euro still has several steps to take – first down to 1.2443, then 1.2200-30 and eventually to 1.1855. Assuming I am right in these next few steps what is beginning to show itself is a market that appears to have calmed its nerves and possible therefore moving back to the measured moves that were the norm prior to this entire crisis.

Elsewhere in Europe the Pound has a move down to 1.3431 to go at least and half a chance of 1.3107 while the Swissie has expected legs higher to 1.1914 and 1.2116-66. So today will be more a day of seeing whether these moves resume directly or we’ll see initial consolidation beforehand. I suspect the latter but not that it should last for too long. By European trading I feel the Dollar will be displaying its dominance and moving to the near-term targets.

Dollar-Yen has shown uncustomary stubbornness in refusing to go down. It will but in some ways I feel this recovery to 92.77 (that indeed risks a little higher) is actually quite healthy. I remain exceptionally bearish and want to see this begin to drop out of the sky and don’t want to miss the opportunity but equally I don’t want to jump the gun and look for losses too early.

The higher Dollar-Yen goes, and this can be above 93.00 – perhaps to around 93.54 – the better the fit in the eventual decline. The previous cap at 92.40 would have forced a bottom to the next intermediate move lower to target too low to fit into the much larger picture. So, on that basis I am quite comfortable. As long as it doesn’t get above 94.62-00 the downside still looks precarious.

Elsewhere the Aussie moved lower well, Dollar-Canada rallied well and both of these have further to go. The Yen crosses were on the soft side and here I have to exercise a little care since while I am very bearish for these too, the short term is not quite so clear. However, I do expect Dollar-Yen to accompany the decline in the Euro and Pound and this will provide some strong drops before long.

Today's free analysis is for GBPUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html

Good luck.

Ian Copsey


Tuesday, February 17, 2009

The Dollar breaks higher against the Europeans...

Friday did end up grinding out corrective patterns and remaining within recent ranges. I remain with a basic Dollar bullish outlook against the Europeans, particularly against the Pound which does seem to have most likely completed the correction and does seem like Cable will be pushing lower quite soon. The only risk in the meantime is the slight chance we could still see 1.4603 a second time before the move lower resumes.

Now, the Euro and Swissie couldn’t have produced amore complicated wave structure. The Dollar remained in the sideways trading range and only this morning has managed to break free of the bonds of the 1.2705 support. The Swissie hasn't quite managed the same sort of break higher but given the targets for this move at 1.2116 Swissie and 1.1855 Euro it is clear that the Dollar's gains against the Swissie should lag that of the Euro.

For now I see potential to 1.11914 Swissie and 1.2200-30 Euro before any sizeable correction.

Dollar-Yen has also pushed higher and breached the prior 92.40 high. I really don't want to get caught long here as the downside does beckon and this should just be a deeper correction to the 94.62 to 87.10 drop. We're going to have to play this one more by ear as there is resistance between 92.84 and 93.19 which I feel will hold on first test and see what happens then. However, maybe eventually the 93.54 resistance is possible...

However, just to sound like a broken record ... the downside is the larger risk right now so don't fight any stronger push lower...

Today's free analysis is for USDCHF and can be seen on http://www.fx-forecaster.com/DailyForecast.html

Have a profitable week.


Ian Copsey


Friday, February 13, 2009

The end of the week before a long U.S. weekend may mean chaos and/or confusion


With Monday being President’s Day holiday in the States the next update will be on Tuesday

Well, yesterday was mostly a day to forget. If you take a look at the hourly charts you’ll see how price has found it difficult to break away from the Pivot Cloud which is a sign of a consolidating market. I designed this Pivot Cloud to identify the market equilibrium area and thus we really need a decisive break to generate a stronger move.

I had thought we may have seen a larger move yesterday but that was largely restricted to Cable which almost, but not quite, reached its1.4105 target. In may ways I feel this may well be our clue as a correction from some where above the 1.4050 corrective low is normal sort of reaction. Even here, while I feel the low is in place for now there is a slight risk that while 1.4312-16 caps we could just make one new marginal low before the pullback. If I have any preference the break higher should occur soon but this should merely be a correction.

Now, whether this will translate into Dollar losses against the Euro and Swissie is less clear. I feel it will but it is the extent of such a move that is unclear. Specifically with these two currency pairs the erratic and volatile seesaws are causing the entire picture to look totally uncertain. Given my overwhelming bearishness in Cable I still feel the case for Dollar gains is stronger but it’s the process leading up to these gains that is causing a lot of doubts.

The same can be said, to a certain extent, for Dollar-Yen. It is on the edge of the precipice and is due to take the plunge any time. It’s just a case of the short term having to clear itself but once it starts it may push the European currencies in the opposite direction – that is Dollar bullish.

So for today, given the long U.S. weekend we shall either see continued consolidation as the market winds down for the week or, if there are any positions left to clear, maybe, just maybe, we’ll finally see the break occur. To play it safe I’d work with the former – the continuation of consolidation – and thus take profit quickly. Only if we see break begin to look to buy Dollar-Europe and sell Dollar-Yen and the Yen crosses…

Today's free analysis is for USDJPY and can be seen at
http://www.fx-forecaster.com/DailyForecast.html


Have a great long weekend.

Ian Copsey


Thursday, February 12, 2009

After the lull after the explosion risk is for a second explosion...

I can’t say I am too surprised with yesterday’s price action. It always seemed to have the look of a “day after the night before” look about it and that’s the way it developed. I think today has potential to see another decent move, maybe even more than just decent, but it’ll be best to take it in steps given the market’s propensity to enjoy living in tight ranges…

I took a long stare at the Euro this morning. Yesterday’s moves did nothing to inspire what appears to be a very confused market into pushing the limits, seizing the day or even taking the bull (or bear) by the horns… The problem I have here is that either my next target at 1.1855 is too conservative (the alternative being closer to 1.12…) or we’re going to see a new high above 1.3092 but not above 1.3328.

Now if the Euro is going to make another move higher then the Swissie has got to drop. I can make out a case for a move down to 1.1400 again so let’s watch out for this. I can even see an alternative scenario that would suggest a move all the way back to the 1.1280-1.1311 support area but the structure of the decline from 1.1780 doesn’t really support that view…

However, more than just the Euro and Swissie I’d prefer if Cable could be included within this scenario. Well, Cable can move independently from the other Europeans and my preference has been for a move down to 1.4050-1.41. Indeed, that’s a much easier structure to see, but there is a bullish divergence here in the hourly chart, oversold in the 4 hour so maybe there is an argument for a deeper pullback though unlikely a new high. Here we could use a break of the 1.4435-40 area as a proxy break area that should force a pullback higher.

Or maybe I’m just kidding myself and the Dollar is going to make some solid gains but much more than I had originally envisioned… At the end of the day that is my long term view for the coming 2-3 months and all I am debating with myself about is whether this occurs directly or indirectly…

This debate also has minor knock on effects on Dollar-Yen also. While the 90.75 high seen yesterday holds and we see a break below the 89.71 low seen yesterday it does have potential to continue its decline. Probably today is the only day that provides it with a window of opportunity to make one last ditch stand against the inevitable collapse into the depths…

Today's free analysis is for USDJPY and can be seen on http://www.fx-forecaster.com/DailyForecast.html


Good luck.

Ian Copsey



Wednesday, February 11, 2009

After yesterday's explosion today needs to be approached with care

It was interesting taking a look at the charts this morning. Dollar-Yen and the crosses… yeah… I can see what happened there. Cable? Yup – the break was bound to cause that move, the Aussie & Dollar-Canada… ok, can accept them.

The Euro and Swissie? I couldn’t have made that up even if I tried…

Those two have completely shrouded the underlying structure with confusion. If anything the Dollar looks more bullish against the Swissie and bearish against the Euro. Do I think both those will occur? Of course not…

OK, so let’s take a step back and ask whether the recent corrective movements have reversed for the foreseeable future. To be honest, while the reactions yesterday were quite strong, technically Dollar resistance levels have not been broken and there is no absolute confirmation of reversal. Do I think it has reversed? I think so – but there’s still a way to go for the final nail in the coffin.

On the whole I think the Dollar can still make gains against the Europeans today but we’ll still have to exercise some care in running with positions as I don’t really think today will be a runaway day higher for the Dollar. We’re going to have to watch the 1.4382 & 1.4232 supports in Cable, 1.2759 & 1.2682-05 area in the Euro and 1.1708 & 1.1752-80 Swissie. More on those in the individual analyses.

As for Dollar-Yen it is really tough with the bearish cycles to see how it can move back to the 92.40 high – or if it does how it will get above 92.84 and stick. The downside does just look very dominant and this will be the side that should provide the best opportunities over the coming weeks. Any drop below 89.84-00 would set it up for the next bash over the head for a move to around 88.38 en route the 87.10 low and possibly a little below.

So I’m not really keen on calling for an aggressive extension of yesterday’s sharp price movement and it’ll mean that even with a trade taken it will be best to protect this position with trailing stops…

Today's free analysis is for USDCAD and can be seen on http://www.fx-forecaster.com/DailyForecast.html.

Good luck.

Ian Copsey


Tuesday, February 10, 2009

Euro crashes in early Asian trading - will Dollar-Yen follow?

Yesterday turned out to be a strange old day. The daily bias calls were a bit wayward but some of the break levels would have produced a decent number of pips profit.

The first observation I have is for Dollar-Yen. We are very close to a breakdown and this morning’s low at 91.14 with breaks of 90.72-88 also appearing to confirm what should be the beginning of the end. Well, let’s first see if this break happens and then we’ll have to watch the first reactions carefully. If the break doesn’t occur the 92.24-40 and 94.65 tests are still valid. Oops, I’ve just looked – the break of 91.14 has occurred already but not the 90.72-88 as yet so the downside does seem to be beckoning.

I have to say from this morning’s analysis the JPY crosses are generating some potentially negative structures also. The momentum conditions at their peaks were not particularly bearish but I wouldn’t want to fight any breaks of the levels I’ll give in the analysis.

Equally, the Dollar appears to have resumed its move higher. I’m groaning as I write as the near term levels that would have provided trade set-ups have already been breached and this is going to make the comments a lot more tricky as the breaks have generated strong follow-through already… In that light many of my comments are going to have to be bubble-wrapped and provide overall direction and major support/resistance levels.

Take care with the Euro and Swissie as we shouldn't see direct follow-through with a correction likely due first... The bigger calls are in Dollar-Yen and the Yen crosses ... if the 90.72-88 area breaks ... look out below...


Today's free analysis is for GBPJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html

Good luck.


Ian Copsey


Monday, February 9, 2009

The Dollar looks like moving back higher today within range

The caution I recommended on any direct follow-through in the Dollar’s decline proved correct. The reactions in the Euro and Swissie were rather different as the Swissie made marginal new highs while the Euro failed to get much below Thursday’s 1.2760 low… The pullback was actually quite firm but does look complete I feel although quite how quickly any resumption of the Dollar’s strength will resume is a little mixed. I even have some doubts that it will…

The problem I see is that the deeper pullback in the Euro hit the 1.2961-02 resistance area. This was generated by measurements within a triangle structure which implies that if we get any declines here they should be limited to around 1.2777.

Now, I do expect this at a minimum but quite how the Swissie will perform at this point will be interesting. Its 1.1743 peak on Friday was with positive momentum and there are no signs of a larger top here. Thus we should move to a new high. Here the important support is at 1.1571 so we’ve very nearly reached this so just as the Euro should go down the Swissie should continue higher and we’ll have to see just how well it performs.

The Pound took full advantage of the chance to maintain its rally and almost reached the 1.4863 target on Friday though after the weekend break it has managed to make the test this morning. There are minor signs of a cap in place but these aren’t that strong. Given its ability to shake off any correlation with the other Europeans this one needs some care but I do see further resistance around 1.4922-32 which may well provide a deeper pullback consistent with the Euro & Swissie…

The market appears a little stunned with Dollar-Yen pushing above 92.00 and if we are to see a move up to the 94.62 area again (which is definitely a valid target in the larger structure as well as the shorter) we’ll need the 91.41-65 area to keep losses at bay. However, I’m not convinced we’ll see direct follow-through higher with the 92.75-84 area providing a short term barrier that could see a short period of consolidation before rallying further. Any loss of 91.40 followed by 90.41-72 would open the abyss of which I have been warning for some time.

Elsewhere the Yen crosses look much firmer and cautiously we’ll see these make further progress. The Aussie looks firm as well with key support at 0.6601-31. Dollar-Canada frustrated with its snap above 1.2521 and sharp reversal. Dare I say this looks destined for the 1.1931 area once again?

Today's analysis is for EURJPY can can be found on http://www.fx-forecaster.com/DailyForecast.html
Have a profitable week.

Ian Copsey


Friday, February 6, 2009

The week ends with a break but there may be insufficient momentum to follow through


After far too long being indecisive the market finally made its move. The biggest impact was felt in Dollar-Yen which pushed up directly to 92.24 and just short of the 92.53 target. The pullback has been deep and is resting on key support levels as write. While these supports hold we could actually complete the move up to 94.62 again but given the amount of playing around below 90.75 the normal reaction following such a large consolidation is a swift follow-through higher. If this doesn’t happen then we have just seen a deep pullback and the rest will all be downhill… When I say downhill, it should really be very strong…

The reactions in the Euro and Swissie were Dollar positive but not with the same sort of aggression seen against the Yen. Indeed, while I see modest follow-through today the prospect is more for a correction from those marginal Dollar highs so unless the 1.2650 Euro and 1.1780 Swissie levels break just take care…

The Pound had another positive day as well in defiance of the normal correlation with the Euro. This should also see a little further before a pullback but the underlying rally shouldn’t be over quite yet. The impact of the rallies in both Dollar-Yen and Pound-Yen had a leveraged affect on the cross. Here I have to be a little cautious – depending on what Dollar-Yen decides to do in the 90.40-84 area. If it bounces, as described above it should have the same impact on the cross.

One of the reasons I am a bit more cautious is that Euro-Yen doesn’t have any where near a bullish outlook. Indeed, I feel that yesterday’s 118.90 high may well have been the most we shall see with losses expected here down towards 114.00-50.

This really does open up a conflict in trying to correlate the crosses with the underlying Dollar-Currency moves. Indeed, the 119.40-84 support in Dollar-Yen is the key here and if it breaks it may well bring everything down around it…

Finally, the Aussie still looks form but may see a pullback during today while the Canadian Dollar has gone into one of its introspective blue periods where it can’t find out what it wants to do.. Probably best to ignore this one today.

Today's free analysis is for AUDUSD and can be seen at http://www.fx-forecaster.com/DailyForecast.html


Have a great weekend.

Ian Copsey


Thursday, February 5, 2009

Ranges tighten ahead of a large breakout for the Dollar


Just as I thought we could test the extremes of the wider trading range the Dollar pulled back higher again. The break levels for my bias quoted yesterday worked well in this event and provided quite a decent follow-through.

So we’re back in the same position… The Dollar is pushing higher and threatening to retest the old 1.2705 Euro low and the 1.1714 Swissie high. Certainly if these levels break the implication does seem to be for a solid follow-through that has potential to be quite persistent with 1.1855 Euro and 1.2116 Swissie the next major targets.

However, given the market has clearly been less than confident in pushing through in either direction it will be prudent to ensure that price actually demonstrates that it has the power to do so… Until then it is quite possible (and more my preference) to see the trading range continue today and possibly a little in to tomorrow. However, a larger directional decision does seem to be brewing up and I see equal risk on either side right now.

The immediate Dollar resistances are around 1.2755-91 Euro and 1.1647 Swissie. These should be given a little leeway to establish themselves being generated from a potential triangle pattern which can produce less than satisfactory projections at times. If these break then the stronger bullish structure will begin to dominate.

On the assumption that they’ll hold then we could move right back into the recent range for the Dollar to decline to the 1.3000-30 Euro area and the 1.1445 Swissie area.

Clues from the Pound and maybe the Aussie… well, both have been firm and I can’t say the momentum picture is particularly bearish for either of them. It does keep my outlook more bullish and thus, as long as the Euro & Swissie retain a degree of correlation it does suggest the consolidation will continue.

Elsewhere Dollar-Yen and the Yen crosses continue to hang by a thread. In particular Dollar-Yen is building up a ragged picture which unless we get a strong reversal higher will begin its ignominious decline into the fiery depths… I cannot but emphasize the very, very significant downside risk if the 87.10 low breaks… Ironically, however, the lower this possible correction dips the more bullish structure begins to fit much better. It therefore looks like we’ll see some more losses and have to see whether these are contained… or not.

Good luck.

Ian Copsey

Wednesday, February 4, 2009

Why economic analysis doesn't cut the mustard...

Yesterday I had an interesting day.

My report was cautious on the Euro and Swissie but I saw a bullish Pound and also Aussie Dollar, Dollar-Canada topping out just above 1.25 and a neutral to bearish Dollar-Yen. Overall a good day’s work.

As you know I published the Euro analysis as the daily free analysis:


Bias: I feel some care needs to be take today with momentum signals and structure conflicting
Losses pushed directly lower to the 1.2705 low. The pullback has been steady but I suspect that at the very least we’ll see one more attempt higher and we’ll need to observe reaction at key resistance. I feel the 1.2800 support may well hold today but allow for 1.2768-78. A subsequent break above 1.2875-97 would provide the next lift to resistance at 1.2942 and probably 1.2963 & the key resistance at 1.3017-30. This must cap for a larger bearish move. Breach would accelerate gains to 1.3090-1.3120 and later to 1.3178.
While neutral I’d added the bullish comments to be seen while the bearish were in the attached PDF file.

Early in the European day I was advised that there had been some comments. Great I though, I like to have traders reading my report.

“No way, this thing is going lower today. German retail sales came in worse, US Pending Home Sales will be better than expected. More room to go south that is…”

It’s good to have an opinion. At that stage the Euro had remained above 1.2801 but was in a neutral consolidation. So effectively it was still in a neutral condition.

7 hours later the Euro had spiked up to… guess where … 1.3030 and stalled. This brought an indignant comment:

“What’s happening? My prediction about housing data was right, be it is going north! Why???”

I tell this tale partly because I was on the mark but also just to highlight how blunt an instrument economic analysis can be. It also highlights how little is known about price forecasting. It also explains the reason I gave up economic analysis many, many years ago… It just doesn’t work.

After I had become a technical analyst I was hauled back from Hong Kong to the head office trading room in London for Barclays Bank. I’m sure someone did it as a joke but I was sat next to the economist. During one of our conversations he finally explained the “facts” to me…

“Ian,” he said, “you’ll never win. If I make a bad call then it’s for the right reason, if you do then it’s always for a bad reason…” I saw red at that… but I can at least look back and laugh. Actually the economist was a really nice guy so no hard feelings!

Traders come into the market and study all the technical indicators and fundamentals releases and how they should theoretically react to these releases. However, very little, if any, study is made of price.

There is nothing else that can produce accurate support & resistance levels.

I rarely ever know what economic releases are being made each day. It just doesn’t impact on my analysis. Everything is price driven. However, it isn’t something that can be picked up by reading a book, by using it for a week or two. It does take a great deal of study over years to become comfortable with recognizing the weird and wonderful structures that Elliott Waves can make, the types of projections in each currency pair.

However, it doesn’t make too much difference. As long as you have gathered trade set ups with which you feel comfortable then the sort of daily report I provide will give you consistent support & resistance levels around which you can confirm the expected trade – whether that be a bounce from support or breach and selling into weakness.

What is lacking in the majority of the market is confidence in support and resistance since they are not easy to produce.

I had, incidentally, also advised that a break of 1.1545 USDCHF would lead to a decline to 1.1405 as well. Not a bad trade…

The key is knowing which levels are important. These are the ones I produce with moderately high consistency. Try the report out of you would like to see!