Friday, August 14, 2009

The underlying trend is lower but there is risk of early consolidation before this resumes

The Dollar moved lower again all round. The additional losses broke the levels that made the alternative bullish structure and thus we do seem to be left with a fairly distinct bearish structure. The only barrier I could see in the way is a larger consolidation but I’m not sure we really have time for that in terms of the final cycle low area around the end of the month – that’s only 2 weeks away.

So now we have to plan the route. I have to say the losses seen were a lot less aggressive than I had been imagining but they do seem to be developing in a regular manner and should continue to do so. However, we do seem close to an intermediate minor low around 1.4335-61 EURUSD, 1.0638-66 USDCHF and probably 1.6597 GBPUSD. This latter level obviously isn’t a new extreme but this does need a pullback and is in the midst of this and should match with the anticipated Dollar corrective resistance levels in the other two. Once they are seen we can look for the Dollar to resume its decline and retest the lows we saw a couple of weeks ago.

Now, one that didn’t go as planned was USDJPY… It began a rally but then failed… It’s not looking particularly happy with itself either. At this stage I don’t want to get too bearish but that switch isn’t a million pips away. The bigger break level that would cause me concern is at 94.35 and before then I see potential support between 94.64 and 94.85. It will be important to have a reversal confirmed by a reversal pattern here given the surrounding Dollar weakness against the Europeans. Until it does slip I’d still prefer an argument that would take it to 101.43 again…

Given the fact that the JPY crosses also seem to be sagging a bit too much USDJPY weakness does seem likely but do remember the JPY crosses should also be influenced by the expected corrections in the Europeans.

AUDUSD is close to an intermediate peak – the 0.8469-81 area should be the most we see. USDCAD looks pretty mixed so I’m neutral on this today but within a larger bearish structure.

Today’s free analysis is for GBPUSD and can be found on along with yesterday’s trade set ups (215 pips).

Have a great weekend.
Ian Copsey

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