Tuesday, August 25, 2009

The Dollar looks like seeing a pullback higher before additional losses

I can’t say yesterday was quite what I had expected but it was interesting… and may even be throwing a small spanner in the works.

Let me start with USDJPY. This worked perfectly really didn’t it? Well, the top between 94.90-95.20 was smack on target but the decline from there hasn’t really set me alight with enthusiasm for the downside. This should have been a peak from where the next decline to 92.03 should launch and with that expectation also comes a requirement for how that should develop – and so far the decline has more corrective tendencies rather than trending.

From that perspective I’m pulling the plug on the direct decline and beginning to sense that we could even see a rally to 95.36 from where the next bearish leg should develop. The intermediate question is just where any correction from 95.06 should end… I can’t even rule out 93.71 before a second rally… Let’s just say that until that area breaks the upside remains a threat while below the 93.41 low would seal the downside fate.

Next the Europeans… Well, they didn’t get very far did they? I’m beginning to think that we may have seen an intermediate top at 1.4369 (and not the 1.4406 level I indicated yesterday) and this implies a pullback to 1.4203-28 before higher again. The confirmation of this comes on a break of 1.4280 and until then There is every chance we’ll see a pullback to the 1.4320-30 area…

Translated into USDCHF we should be looking for a move to 1.0667-86, a break above 1.0629-32 providing the trigger and until then a pullback to around 1.0590-00. For GBPUSD this actually appears to point to a new low below 1.6277… A break below 1.6376 will be the trigger and should extend to 1.6301 at least and I feel a spike down to 1.6214-32 is the most likely target. From here look for a solid rally.

Now, how this impacts on the JPY crosses is hard to be exact, but my feeling is that we’re finding corrective lows around current levels – the 134.55-65 EURJPY and 78.55-74 AUDJPY supports likely to hold while GBPJPY does seem to have a slightly stronger bearish look about it – which seems to match with the bearish GBPUSD view. Here the 153.46-57 lows are more likely to be retested before rebounding.

Thus, keep an eye on breaks and watch for the right patterns to develop – although frustratingly these have not been abundant recently…

Today’s free analysis is for USDCHF and can be found on along with yesterday’s trade set ups (0 pips).

Good luck.
Ian Copsey

No comments:

Post a Comment