Wednesday, August 26, 2009

The picture is mixed and I can foresee the possibility of Dollar gains today

Yesterday seemed to blow all short term structures out of the window. GBPUSD broke lower but couldn’t sustain that move, while EURUSD and USDCHF saw triangles fail and then the apparent resumption of the Dollar losses stalled and provoked a reversal that seems to contradict the Dollar bearish view. Is it then some kind of strange and erratic correction or …

Well, it took me back to the daily charts. Take a look at USDCHF in particular. Since the original 1.0590 low back at the beginning of June the range has been tight and small breaks only provoke a reversal back in the range. EURUSD hasn’t set the world alight either, breaking above the prior 1.4338 but then making a complete hash of trying to force a move higher. Yesterday, GBPUSD broke lower but couldn’t sustain the move…

For a while I have been looking at the daily charts and trying to apply some logical structure to them within the bounds of the bearish Dollar cycles and coming to a half-conclusion only. This does appear to be some complex correction within a final corrective pattern ahead of a final Dollar decline into next month from where I expect the Dollar to rally sharply.

Given yesterday’s moves I am edging towards a scenario that would call for a larger pullback into the past few months’ range. It does seem rather a radical type scenario but the thing I do like about it is that GBPUSD can make a new low, and USDCHF gets its pullback which the daily chart seems to be screaming for – and now EURUSD seems to be coming in line with the others… Let’s treat this cautiously at first, but if we start getting stronger confirmation it will be well worth watching…

USDJPY dipped as I had though to the 93.72-90 area and although its near-term future is in the balance it can still hold a bullish structure until yesterday’s low is taken out. It will be best to watch for breaks of either 93.72-78 on the downside or above the 94.25 – and then 94.62 corrective highs. One of these should generate the next move and if my view of the Europeans proves correct the rally to 95.36 could well still be on. It is really tight at the moment so take care. If the downside falls then we’re on out way to 92.85 and 92.03.

Today’s free analysis is for GBPUSD and can be found on along with Friday’s trade set ups (-105 pips).

Good luck.
Ian Copsey

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