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HARMONIC ELLIOTT WAVE

Tuesday, June 9, 2009

The Dollar is balanced although I'm not really in favor of strong gains today

I almost got my way yesterday in terms of seeing the Dollar follow-through higher and then to see a pullback but the rally extended further than I had anticipated. Before doing the analysis I thought I’d be talking about seeing the correction back lower today. Well, in general the hourly charts are seeing Dollar bearish divergences but the pullback as been shallow so far and in some cases my RSI is already over sold and this could easily mean we’re going to see new highs again today.

However, I do think we need take it cautiously as in some cases a Dollar follow-through today would stretch the limits of what would normally be expected on the first move higher. I feel it will come down to either a pullback lower today or we shall see another 1-3 days of rally in which we see quite a strong follow-through. Given the time frame for the final high around the end of next month I feel this may be too early. And this then returns me to the idea that we are more likely to see the Dollar drift lower again…

When it comes down to this type of decision the market has to make it should make for a make or break support/resistance area at which we should see a solid move and we have to observe these levels to identify a trade set up – preferably with price patterns. I’ll attempt to describe these in each of the individual analyses today.

USDJPY spent the day in the doldrums – a relatively tight 63 pip range all day long – that certainly didn’t reach either my buy or sell levels. Again, like the Europeans it’s poised and if I have any preference then it is still higher while the 97.91-98.19 area supports. I still see resistance in the 99.12-48 area – even 99.64. While a break of 97.91 would open up a drop through to 96.80 at least and maybe even down to 96.02.

I should add that I feel a lot of care needs to be used with handling USDJPY as it seems to be risking having one of those whippy periods that fail to see follow-through wherever it goes. Pretty much as I’d outlined a few days ago I’d really prefer to sit back and watch to see what structures develop.

The JPY crosses however do seem to have a bullish bias but which side – USDJPY or EURUSD – will drive this next move? If USDJPY remains range bound it would therefore suggest potential for the Dollar to fall off today. Keep watching the Europeans to see what impact they’ll have on these crosses…

AUDUSD still looks slightly bearish and USDCAD slightly bullish but towards the end of the current moves.

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.

Good luck.
Ian Copsey

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