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HARMONIC ELLIOTT WAVE

Friday, June 12, 2009

A bit later than expected - but the Dollar should rally today

I’m not really surprised with yesterday’s moves. The scenario of another whip back lower in the Dollar was definitely one to be watched and this came to fruition. It has also relieved the conflict between the deep pullback in EURUSD while those in GBPUSD and USDCHF had been comparatively shallow. These new lows generate a base corrective platform in which the Dollar can now safely rally with more correlation between the Europeans.

If there was anything that surprised me then it was the depth and aggression of the rally in GBPUSD – almost to the 1.6662 high. It’s so close however, that there is little room for any further gains here without registering a new high… I’m basically not in favor of this occurring because of the 1.5801 low which I feel broke a key low at 1.5852… However, I do have to add that the general area of that low was quite messy and open to interpretation.

So tentatively I feel we have probably seen the full extent of the Dollar’s pullback now – just a little later than expected but that is not too much of an issue. Clearly there has been no confirmation of a reversal to renew the medium term uptrend but that is the focus for the start of the day but technically there is quite a long way to rally back to yesterday’s corrective highs to provide that confirmation. Thus, while I feel we shall make gains it may well be that we don’t actually achieve that confirmation today.

USDJPY was as feared, ratcheting back higher to a marginal new high only to see reversal lower. I suspect we’re in a sideways consolidation and as I have mentioned before the risk in USDJPY when this happens is the tendency to see swing lows/highs broken but then reversal. Best still take care here.

The JPY crosses are mixed and could easily break in either direction but if the Dollar rallies against the Europeans it may make the same attempt against the Yen. These are still quite risky currency pairs and best watch the basic constituent currency pairs for direction.

My apologies but due to further technical problems I am unable to update the website. I should be able to resume updates of the free analysis and trade set ups next week.

Have a great weekend
Ian Copsey

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