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HARMONIC ELLIOTT WAVE

Wednesday, May 27, 2009

I still favor the bullish Dollar correction continuing

Yesterday started going well with the Dollar gaining against the Europeans as anticipated. I hadn’t really expected that the corrective rally would be particularly direct – indeed, a more erratic rally would seem to be more likely. The pullback after those initial gains was really very, very deep.

Has it broken the Dollar bullish scenario? Against the Euro and Swiss Franc – not (yet?). However, we have already seen GBPUSD push higher this morning and does seem to be headed for the 1.6085-93 area. The question remains whether EURUSD and USDCHF will follow. To be honest, as things stand right now I could still argue a Dollar bullish case and if I have any preference due to my eventual targets this is what I would like to see. It will require the Pound to rally while leaving the other two static and this will be the testing period…

Does it make any difference to the underlying Dollar bearish stance? Not at all. However, what it does risk changing are the targets. If EURUSD rallies directly from here, there will be a greater argument for the 1.4717 peak to be challenged although at this point I wouldn’t expect any (or at least not significant) breach. In USDCHF the 1.0370 low will be definite and maybe a little below.

So the first half of the day is going to be the testing time between the - larger correction then Dollar decline - versus - the direct decline.

USDJPY somehow managed to remain all day between the trigger levels of 94.40 & 95.25 I set. However, this morning has finally seen this break and it should continue moving higher. The next intermediate stalling point should be around 96.39 and later to the 96.69-00 resistance. This should complete the complex correction from 94.54 and then the next move should still be lower.

The JPY crosses likewise remained range bound yesterday but have broken higher along with USDJPY which was always likely to provide the trigger. For the moment they should follow USDJPY higher and the rest will depend on the movements in GBPUSD and EURUSD…

AUDUSD dipped lower then reversed to new highs but unless 0.7900 breaks I still favor a second correction lower. USDCAD was much like the rest of the pack – it rallied and then reversed to new lows. Support here at 1.1120-40 seems key here.

Today’s free analysis is for EURJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups.

I shall be presenting a seminar in Hong Kong on Saturday 27th June at the Excelsior Hotel in Causeway Bay. Please see
http://www.earlthorn.com/ for details.

Good luck.
Ian Copsey

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