Monday, June 8, 2009

There is risk of minor new highs for the Dollar but I suspect a correction later in the day

Overall we got very close to what I had been expecting on Friday, a quiet first half of the day which then turned into solid Dollar gains by the end. We should see a little more as well today but the move does seem close to exhaustion now and once this first move higher is completed the risk will be for a day or two of corrective price action.

The sort of target areas I’m looking for are 1.3895 EURUSD, 1.0937 USDCHF and around 1.5888 GBPUSD at least. The target in GBPUSD is a little less clear and we may just need to handle this with some care. There is another, deeper target at 1.5825-32 and only break of this would imply a much deeper move to 1.5699 though I have to say I’m not really in favor of this scenario.

Once these targets are seen I can begin to work out some rough stalling areas for the correction. The problem will be trying to anticipate how long the correction will take and what pattern this will take.

The bigger surprise for me was the break higher for USDJPY. I did voice my concern on Friday that the downward structure was beginning to look a bit shaky and the burst above the 97.23 high provided quite a solid follow-through. In the larger picture this does tend to soften my larger bearish view. There is even a small chance it could totally reverse it and therefore I feel the next week or so is going to be critical.

Ideally, I’d like to see 99.12-48 cap this rally. If not, then there will be risk of follow-through to 100.33-42 and this should then be critical. If it stalls there we could see a larger sideways consolidation develop. If not… well… the risk would seem strongly higher.

I have to admit I don’t really like the directly bullish scenario above 100.42 as the implication would seem to be that the 87.10 low was the end of the multi-year bearish cycle with the resulting scenario becoming quite bullish – maybe even closer to 110.65 again… However, I feel the JPY crosses don’t look that happy and while I find the top difficult to identify I feel these may well be the driver.

AUDUSD & USDCAD pretty much reflect the over Dollar-Europe position.

Today's free analysis is for USDCAD and can be found on which already shows Friday’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 for details.

Have a profitable week.
Ian Copsey

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