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HARMONIC ELLIOTT WAVE

Tuesday, July 21, 2009

The larger risk is now for the Dollar to reverse higher but beware of a possible marginal new low first

Yesterday’s movements were close to expectations and are encouraging for the overall corrective structure with Dollar weakness seen towards the rough support level expected against the European currencies. However, this being the case I feel we are due a pullback over the next day or two once the targets have been achieved. One surprise was GBPUSD which, after holding back compared to EURUSD and USDCHF, came powering higher yesterday to reach the sort of resistance levels I had been anticipating last week. That in itself is also a positive point for the correlation of expectations over the next day or two.

Basically today looks as if it can extend the Dollar’s losses by just a little more and I have to allow for 1.4300 EURUSD, 1.0623-33 USDCHF and 1.6581-93 GBPUSD. However, once seen the pullback can be expected to develop and this should be relatively deep. That should leave the way open for final Dollar losses into sometime next week.

USDJPY managed to provide quite a firm showing yesterday but the 94.71 resistance basically held with 6 points slippage and probably means this is already in a corrective structure that should eventually break for gains towards the 95.30 resistance at a minimum. But we should be patient since there is still chance of some consolidation first…

The strength shown in USDJPY also spilled over into the JPY crosses which therefore saw a stronger follow-through higher. I feel these still have a little more to go so quite probably we’ll see USDJPY modestly firm while the European currencies see modest strength today before correcting…

The same can be said of AUDUSD and USDCAD, both of which provided the sort of follow through anticipated but equally do not seem too far of their respective targets.

So in summary it looks like in the main we’re going to see some mild extensions of yesterday’s moves but expect corrections very soon…

Today’s free analysis is for USDJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (70 pips).

Good luck.
Ian Copsey

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