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HARMONIC ELLIOTT WAVE

Thursday, June 25, 2009

It could be another messy day of range trading

Yesterday proved to be quite interesting. I outlined the conflict I had between the outlook for EURUSD versus USDCHF and how any significant weakness in the Dollar was unlikely. Well, USDCHF bounced perfectly from the support area I provided though I will not in any way claim that I expected a 400+ pip rally… However, it has avoided that conflict completely now.

Perhaps that statement could be read to mean that I still feel that EURUSD was now free to extend its gains into the 1.4177-1.4212 are. Well, it did cross my mind at one point last night. However, the pullback has been so deep I do really find it hard to believe we could see that rally. And that means we have to find an alternative structure that suits both EURUSD and USDCHF.

There doesn’t appear to be an argument against a statement that EURUSD has seen a long period of sideways consolidation and very whippy price action. This is beginning to look like an irregular triangle to me. This would imply that we could still see it lower but then back in a correction before the eventual move lower. Equally USDCHF is rather mixed and probably still in a state of shock with the size of the rally. However, it is due a pullback – the question being whether this will be direct or after a minor new high. Thus the combination of the pullback in both EURUSD and USDCHF over the next day or so should provide the end of the consolidation and for the MT Dollar rally to resume.

USDJPY is now a little mixed. I feel the JPY crosses have a small pullback higher to be seen but after that the risk turns lower again. Now whether this will be driven out of a strong Dollar-Europe or another decline in USDJPY (or both) is all up for grabs. However, if I have any preference then it is bearish USDJPY after a pullback.

Today’s free analysis is for EURUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (195 pips).

There are only a few more seats available for my seminar on price forecasting in Hong Kong on Saturday 27th June at the Excelsior Hotel in Causeway Bay. Please see http://www.earlthorn.com/ for details and to register your attendance.

Good luck
Ian Copsey

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