Friday, July 31, 2009

There are a few conflicting indicators today so take care


I sat for a moment to try and gather some thoughts about yesterday’s moves to try and find a common thread that would provide insight as to what is going on. To be honest not a lot came to mind…

Let’s start with USDJPY since that was closer to expectations. I was basically bullish yesterday but the early pullback didn’t materialize and instead price moved sideways before breaking higher. It dragged the JPY crosses along with it which was in line with what I had been cautiously looking for. Momentum still looks positive and therefore the 96.15 target now looks the most likely point of reversal – and be aware that this should be a major peak so the next target will be back close to 91.74... Indeed, the JPY crosses look a bit jaded and seem close to their peaks too. Thus, I’ll stick with this and only above 96.20-51 USDJPY would cause me to be totally wrong.

Now, the Europeans… Well, while I was not totally happy about the actual levels in the EURUSD range I can accept what happened – but GBPUSD back at 1.6525 and USDCHF remaining doggedly firm was something which I find hard to absorb into logical structural development.

However, while EURUSD finds the 1.4100-10 resistance too strong it does tend to work with a bearish structure and as such I feel we should see the Dollar stronger over the day and into early next week. I am looking for a retest of the 1.3747 low early next week but feel that general area will hold and allow a reversal higher.

This will imply a much stronger USDCHF – something I still find difficult to really accept but yesterday’s lack of downside will does demonstrate the strength in the Dollar right now. I can see resistance at 1.1067 and even as high as 1.1166. This will require some care as it progresses and it will be worthwhile using EURUSD as the marker. That brings GBPUSD. This almost looks as if it is setting itself up for a flat correction – so a return to 1.6284-1.6310 – then the subsequent rally should move to new highs…

So as my last update for a week may I thank you for your patience during this period. It has been a busy year so far and I’m certainly in need a of a good break and I hope to come back more refreshed.

Today’s free analysis is for USDCHF and can be found on along with yesterday’s trade set ups (228 pips).

Have a profitable week.
Ian Copsey

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