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HARMONIC ELLIOTT WAVE

Friday, July 24, 2009

The risk is still for the Dollar to find new lows against the Europeans

Nothing seemed to be straight forward yesterday and even some of the respective moves in the European currencies also tended towards non-correlation. All I can say is even though I failed to catch many of the moves yesterday the manner of all this does represent the current position of the wave structure which, as I have mentioned before, is a correction within a correction.

However, we are nearing the end of this phase. I don’t think we’re quite there yet and thus I do still expect the Dollar to weaken again, probably by end of day and may last into Monday to see the corrective Dollar lows in place. For the record, and we’re going to have to be flexible on this, the 1.4338 area is the favored high in EURUSD, 1.6743 in GBPUSD while USDCHF has a choice of 1.0590 and I tend towards 1.0527 or maybe even 1.0488. I suspect the first moves today may well deepen the current correction before we see the final losses begin.

On the other side of the world USDJPY saw a very solid rally. Frankly the rally from 91.74 actually has the look of it being much stronger. I do find this hard to accept in some ways and I remain cautious but looking at the 5 minute charts there does seem to be risk of this extending quite a bit further still. 96.15-30 is one possible stalling point while anything stronger would suggest 96.85… As I said, I am not 100% comfortable with this and see the key support area around 91.70-80. Much below would calm me down and suggest a return into the recent range…

However, I seem to have found the same bullishness in the JPY crosses. Momentum is a little shaky and thus, as with USDJPY, we’re going to have to remain cautious. But if the supports I’ll place in the respective analyses remain intact the implication is higher…

AUDUSD still has more to go on the upside although much like the Europeans I feel a minor low lower in early trading is more likely before it can move higher again. USDCAD defies any attempt at a decent correction and seems to be heading for the 1.0783 low and probably a small overshoot to 1.0730-50…

Today’s free analysis is for USDCAD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (34 pips).

Have a great weekend.
Ian Copsey

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