Wednesday, July 22, 2009

Targets met and now we should see the Dollar correct higher

I was mostly very satisfied with the analysis yesterday with the Dollar finding lows right around the expected levels and which then provoked a sharp reversal. This puts the overall structure right where I had been expecting and it does seem to imply a correction higher for today at least and will probably stretch a little into tomorrow. Following that we can expect further losses into Friday and possibly Monday which again should spark a much larger reversal.

In general I expect the Dollar to recover to around 1.4000-50 EURUSD, to 1.0789-1.0844 USDCHF while GBPUSD led the way yesterday much earlier with its drop from 1.6557. This is where I must ass a word of caution. The retracement target for GBPUSD should be in the 1.6321-56 area. The problem here is that yesterday’s decline has already reached 1.6383…

Unless we see the reverse of yesterday with GBPUSD recovery ahead of EURUSD and USDCHF we shall have to watch very carefully how this Dollar pullback develops and accept the possibility of a more conservative target for the latter two. Ideally I’d like to see GBPUSD enter into a sideways consolidation while the other two play catch-up. If this doesn’t happen then the alternative of a more limited correction is possible. Therefore do take care.

Now USDJPY looked quite positive with its bounce from 93.75… but then it crashed down to just above the 93.26 swing low. This is beginning to suggest that we have already seen a peak in USDJPY. It won’t be confirmed until that break is made but when I looked at the JPY crosses the glaring risk to me was an acceleration lower. I can’t rule out a sideways consolidation today but just keep in mind the potential for a shock decline that would quickly take USDJPY back towards the 71.74 low…

AUDUSD is mixed – though for today bearish and I sense that here too the risk may well be strongly lower and may have something to do with the decline in USDJPY. I suspect we’ll see 0.7991-0.8025 at a minimum but if this breaks the next target is at 0.7925…

USDCAD should correct higher along with the European currencies.

Today’s free analysis is for USDCHF and can be found on along with yesterday’s trade set ups (81 pips).

Good luck.
Ian Copsey

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