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HARMONIC ELLIOTT WAVE

Wednesday, September 30, 2009

New Dollar lows seem to be on their way in EURUSD and USDCHF but some care is required

Yesterday was mostly in line with expectations although with a few small variances. However, I’m not entirely comfortable with the moves in EURUSD and USDCHF. The stalling point in the former at 1.4527 was within the support area I provided and from that point of view does still hold within a bullish structure but within the decline the structure didn’t seem quite right. With USDCHF breaking the 1.0388 high – although holding the reserve 1.0406 resistance – again I can’t totally say that there’s anything wrong but it has left me with a significant degree of doubt.

This is enhanced by the strength in USDJPY. There’s no guarantee of a correlation between this and the two main European currencies and right now as short positions appear to be unwound this can definitely occur. Indeed, I still feel there are further gains to be made in the JPY crosses and perhaps that is my stronger opinion today. However, I am also aware that this is almost certainly a correction and therefore the risk is that the erratic manner of the correction will continue. Eventually, where I see the risk of new lows in the crosses is from the impending reversal in the Dollar’s fortunes against the Europeans.

However, I would like to see a stronger thrust by EURUSD and USDCHF to give me more evidence that they mean business in looking for a final marginal new low before the larger cycle reversal. It is this expectation that we are due a significant low in the Dollar around this time that adds to my concern. The 1.4844 level was a daily target and while 1.0184 was not a specific target it does come within the boundaries of and expected low.

Therefore, I feel we should still be open to either scenario and not to force one view that may cause us to miss an opportunity in the other. I feel more strongly now that USDJPY has made its low so we should be concentrating mostly on the upside but had a natural barrier around the 91.58-62 highs that should trigger a correction – and one that may well be quite deep.

Take care today, keep trades tight and be aware of the risk of the Dollar possibly beginning it’s stronger up cycle at any time.

Today’s free analysis is for EURJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (-65 pips).

Good luck.
Ian Copsey

Tuesday, September 29, 2009

There’s still a question mark over whether we’ve seen the final low in USDJPY

The sudden rush to sell USDJPY was confined to the first hour of trading yesterday which tends to point to the possibility of final sales ahead of the fiscal half year end, yesterday of course dealing spot for the 30th September… The pullback as been pretty deep but at 90.16 which has just been achieved is still just about within the boundaries where we could still see one further low – obviously closer to the 87.10-40 area.

As far as momentum is concerned, the daily & weekly charts support a reversal while the shorter timeframe charts only registered oversold. However, what we do also have to keep in mind is that we saw a spike low and this can throw momentum off track. What I do think we can suggest is that any break above 90.20-50 will provide a stronger reversal signal. Until then we still have to watch out backs.

Indeed, USDJPY is beginning to correlate more with the European currencies and thus we should consider these as an indication also. The Dollar’s pullback here has been a lot more complex than I thought it would be when it first started. I still have this 1.4514-35 area as providing support but I’m a bit put out by the fact that USDCHF does seem to have met its high yesterday at 1.0373 – stalling nicely below the 1.0388 swing high. I’d much prefer this to remain intact although I also see resistance at 1.0404-22. Still, as I write the decline in EURUSD is outstripping USDCHF so there is still potential for (maybe) a double top in USDCHF while EURUSD stalls in the 1.4514-35 area.

This has been my outlook for some while and what it may mean is that if the Dollar begins to drop against the Europeans, then we could see USDJPY stage a pullback lower. Then we have to consider GBPUSD which has been the recipient of quite severe hatred. However, it’s not really following EURUSD lower and since I have a larger resistance back at the 1.6045-74 area this tends to suit my outlook too.

These are the basic outlines of what I feel we should be looking at today. Just in case there are any remaining extremes to come we should note what levels would most likely confirm another sharp set of movements. More I feel today will hold fewer shocks and hopefully tomorrow I’ll be talking about the final decline in the Dollar into its cycle low.

Today’s free analysis is for USDCAD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (65 pips).

Good luck.
Ian Copsey

Monday, September 28, 2009

Today may well see the final low in USDJPY

The twists and turns in the European currencies continue. However, I feel we are drawing closer to the final decline in the Dollar which should form a low for some months to come. I have targets for EURUSD at 1.5185 and in USDCHF at 1.0040. GBPUSD is already way ahead of the other two and I shall cover that separately.

I have also been redefining the prospect of a low in USDJPY also which has already entered the broad timing window for a cycle low. In fact, I even feel that possibly USDJPY may well find its low ahead of the Europeans now. It’s not even impossible for this to occur today as I feel more strongly that overall this Dollar cycle low will not produce new highs but fall into a multi-month triangle.

To give some background, the multi-year Dollar cycles are bearish for another 3 years – in fact probably just short of 3 years. These longer term cycles are exerting significant downward pressure on the Dollar with an eventual low expected in mid-2012. This will mean that any upward corrections will be limited by the pressure of these longer cycles.

If we are to see a weekly triangle in USDJPY then it should stop short of 87.10 and I would prefer this to be above 88.00… However, this morning’s collapse makes the 87.10 area more likely. Either way I feel we are within striking distance of a potential low. The fact that Wednesday is the end of the fiscal half year in Japan may well have some relevance. This should place some downside limits on the JPY crosses temporarily but which may extend later when the Dollar rebounds against the Europeans. The one to watch is still GBPJPY which may well be limited to 138.80-139.20 initially.

The firm open by EURUSD seems to point to the risk that we have seen the corrective lows here already and without a doubt the larger risk (even accommodating a final dip to 1.4516-30) is definitely higher and in USDCHF definitely lower. This may limit the losses in GBPUSD to exactly the area we have seen this morning to produce a more sustainable correction.

Today’s free analysis is for USDJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (85 pips).

Have a profitable week.
Ian Copsey

Friday, September 25, 2009

JPY crosses and GBPUSD look to remain under pressure

Yesterday was a day I’d prefer to forget – one of those days when pullbacks were deeper than would normally b expected and the breakdown in GBPUSD seemed to spark weakness in all the JPY crosses. This morning has seen 5-10 times bigger than Asia normally sees and it has been a bit hard keeping up with the changes.

If I can derive any common factor in all this it is that the JPY crosses look as if they are going to continue to be under pressure as well as GBP being generally weak for longer. The short term problem we face is just how much in the way of whipsaws are we going to see within the entire mad rush. With movements coming thick and fast it’s going to be difficult to be precise on the support & resistance too…

If there is any pattern better to trade then it will be triangles within the overall trend. These should at least tend to provide quick and relatively safe trades. Be very wary of reversal patterns and err on the side of caution and be aware of which swing highs/lows will break the section of the trend. Flags could well be useful to spot as well.

In USDJPY I am really mixed between whether we’re just seeing an awfully complex corrective pattern or whether we’re still going to see the move lower to 89.39-52 and now the 88.83 target is also being identified in the shorter term price structure.

EURUSD and USDCHF may well be the safer to trade since they are holding well within the overall structure of a shallow pullback. Watch the 1.4540-80 support in EURUSD and the 1.0349-88 area in USDCHF. These do look like relatively calmer trades to look for. AUDUSD looks somewhat calmer also.

Therefore, as we go into the weekend, I’d suggest keeping to the calmer currencies or if you have set ups that confirm patterns at my more key support/resistance then these may be worth a trade but perhaps reduce the trade size to control in this type of frenetic movement.

Today’s free analysis is for USDCHF and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (17 pips).

Have a great weekend.
Ian Copsey

Thursday, September 24, 2009

The Dollar looks supported for a correction higher

The degree of range trading yesterday cannot come as a surprise but as I suggested yesterday the Dollar seems to have made its lows for now and across the board I feel the wave structures are pointing higher. It should be for a correction only but should last into tomorrow at least and possibly Monday. Well, let’s just say the first move should be over by then. Looking back to what we’re correcting does tend to suggest that this could last a little longer and develop in a sideways consolidation.

Starting with the European currencies certainly EURUSD and USDCHF hold these expectations. We are seeing a pullback from the first knee jerk reaction after the FOMC statements and this is likely to extend a little further over the course of the first half of the day but the second half looks like generating a pullback. Thus, don’t expect any fireworks today but I’ll outline the areas I am looking at in the individual analyses.

GBPUSD may well be the same. I am less fixed in my outlook here. For me the 1.6303 support draws the line between the two views I have. While it can remain above then we could just see a rally to new highs, probably not quite managing to breach the 1.6568 corrective high. If that area is seen then this will be from where the larger pullback occurs. If we break the 1.6303 support any earlier then we shall probably follow the same pattern of movement as in EURUSD and USDCHF…

After its sudden spike lower USDJPY has steadily built itself a foundation to begin probing higher again. Eventually this should find its way back to 92.29-52 at least and may attempt the 93.05 area. That should be enough for today. Next week it can make further upward probes.

That really leaves the JPY crosses a little unclear. I can see structures that could break either way. However, if I have any basic underlying view I feel that we should broadly be seeing some strength and in GBPJPY over the coming days that can be probably stronger than the other two. The only caveat with GBPJPY is the still remaining minor risk of a dip to 147.48 before it makes its stronger rally back above 153.00.

AUDUSD and USDCAD should follow the same pattern in reflecting U.S. Dollar strength.

Today’s free analysis is for GBPUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (-15 pips).

Good luck.
Ian Copsey

Wednesday, September 23, 2009

Most of the day could see range trading but I shall be looking for Dollar strength to eventually emerge

I can’t say I was too surprised with yesterday’s developments although this morning’s whippy moves did come as a surprise. It’s always difficult to adjust the analysis after this type of event but what it does suggest to me is that while Dollar weakness is feared the appetite for following through with this view is not yet sufficient. Of course we have the U.S. FOMC meeting later and while there maybe another attempt lower for the Dollar beforehand, even if it occurs there’ll be no strong follow-through over today’s trading.

So I think we can set ourselves up for a range trading day. However, if I do see any stronger indications from the wave structure it is actually for a pullback higher in the Dollar… However, it would be just that.

If there is anything really to point out today then it’s the situation in USDJPY and GBPUSD. The former failed to see follow-through higher and spent most of the day drifting lower in steps, the last one being a sharp shift lower but which hasn’t seen any aggressive follow-through. There are two potential situations here – that it is just a deep pullback within what we can expect to be a deeper correction high – which is my preferred view – or the move to 92.52 was itself a deeper than expected correction and we’ll see this extend to 89.30-40 before making the larger recovery.

GBPUSD has staved off the directly bearish view and can therefore be expected to make what should be a sizeable correction higher. The initial move still has a little ay to go and from here it will probably get a little more choppy but 1.6488 looks like a potential target area to look for. It should generate a deeper pullback by Friday or Monday though.

Otherwise I feel today will be a less than remarkable day with potential for one further push lower for the Dollar but then coming back into range…

Today’s free analysis is for EURUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (open trade).

Good luck.
Ian Copsey

Tuesday, September 22, 2009

Today’s a day to watch for the first break but don’t expect a fly-away market

What has struck me over the past 24 hours is that the decline in EURUSD appears corrective. Add to this the failure of the Dollar bullish divergences in EURUSD and possibly USDCHF too and I have had to scramble to re-assess the daily chart and the implications…

I don’t think we’re going to see a sustainable move in either direction right now though I do feel that we’ll see the range of trading widen. However, I am in two minds over the next immediate move. In many ways I am more tempted to say that we’ll see the Dollar dip a little further against these two. I can see a barrier at 1.4822-44 EURUSD and at 1.02118-28 USDCHF and I find the prospect of seeing this type of move and the potential reaction in the market quite intriguing as it would force a deeper pullback than the one we have just seen.

The alternative is for the current pullback to extend a little more. This would provide a basis for further losses later. This is probably my second favored scenario…

All this is complicated by GBPUSD which dipped but remained above 1.6113. This also raises some confusion but for now I’ll remain bearish here but will keep a look out over my shoulder. An extension beyond 1.6113-34 would probably only get as far as the 1.5682 corrective low. The alternate outlook if it rallies actually looks much more strongly bullish – in fact to 1.6995 at least… That’s a bit tough to absorb at this point but never say never – this is the Forex market after all…

Finally, USDJPY pushed higher and has exceeded the 92.00-25 area, finding a top yesterday at 92.52. This will mean we found an intermediate (but probably not final) low at 90.12. The first leg higher here looks as if it will retest the 93.29-43 peaks but for the moment that should be enough for a correction lower.

AUDUSD needs to remain below 0.8650-60 to remain bearish while USDCAD needs to remain above 1.0755-70 to remain bullish…

Today’s free analysis is for EURJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (100 pips).

Good luck.
Ian Copsey

Monday, September 21, 2009

The short term wave structure is cloudy so there may be risk of whippy price action today

Friday didn’t produce quite the reaction I had expected in EURUSD and USDCHF and perhaps more than expected in GBPUSD. What really struck me was the fact that the Dollar didn’t really take advantage of the opportunity to press my claim that a cycle low has just about reached its limit. What’s more, price has really confirmed the Dollar bullish divergences with momentum now having returned close to being overbought…

This is a warning and thus we’re going to need to still be aware of the upside risk though even then I’m not sure how far it can go – if it does at all. We really are at a point where the wave structure could sway in either direction and thus we’re still going to have to be aware of break levels. The European currency that has made its impact felt is GBPUSD which was even a little more bearish on the day than I had expected. This morning’s gap lower on open was not on my list of things to expect…

It is GBPUSD that still leads the way. The shorter term wave structure has some ambiguity and the problem here is the wide range of alternatives for the pullback under progress. At the very least a retest of the 1.6274-90 area should be seen, while the deeper pullbacks would have a range between 1.6388 and 1.6448. Thus we’re going to have to be alert at each area to see which provides the final peak ahead of a decline that should reach 1.6113 minimum.

Now, this wide range may well also point to what happens in EURUSD and USDCHF. Being so close I still can’t rule out a test at 1.4808 EURUSD and 1.0217-48 USDCHF… However, at this stage, while those areas hold I’ll still prefer the Dollar cycle low scenario and look for a reversal higher in the Dollar…

USDJPY ended up going nowhere and with Japan on holiday for the first three days this week things are up in the air. I still see a series of resistance points between 91.74-92.25 which, as long as they hold, would tend to argue for another leg lower… A direct break below 90.78-98 would point to direct losses. As for clues we should watch the JPY crosses which themselves are finely balanced still and frankly it’s going to require careful diligence in watching all components of the crosses to judge where the break will come…

Today’s free analysis is for USDCAD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (80 pips).

Have a profitable week.
Ian Copsey

Friday, September 18, 2009

GBPUSD topped out yesterday… today sees EURUSD and USDCHF reverse…

I have to say that EURUSD and USDCHF are driving me crazy… or perhaps more accurately even more crazy… These final stages in the Dollar decline have produced the most bizarre twists and turns in the structure that it is hard to try and keep up with how it changes. However, the final analysis remains the same. We are within a whisker of seeing a major reversal in the Dollar and I really don’t need to change the final stalling targets – it’s just the construction of that decline which is very, very complex.

I should perhaps add a caveat. GBPUSD, after valiantly attempting an impression of a decent correction, finally gave up the fight. Here the downside looms and it would not surprise me to see the move eventually reach 1.6113 and even then it will be for a brief correction. The caveat I should raise is that maybe we have to consider that its European compatriots also found there extremes and actually we’ll see the Dollar rally from here. I doubt it, but it is something to keep in mind as we get so close to the turning point.

USDJPY still has me wondering. I dearly want to stick to a bearish stance. However the crosses are providing a small warning. GBPJPY is bearish but this could well be more a reflection of GBPUSD rather than USDJPY… The warning we need to note is the growing evidence that EURJPY and AUDJPY may have a little more to go on the upside. It’s touch and go and I’ll take a neutral view overall and let the price movement over today push me one way of the other. However, if the Europeans are about to turn we can’t rule out strength in USDJPY. Wait and watch here. Another thing to note here is that Japan has developed an alternative to Golden Week … From Monday to Wednesday next week there is a bank holiday here and this has been dubbed as Silver Weekend. We can’t expect too much to come from these shores to move USDJPY…

Finally, AUDUSD still seems to have potential for one poke higher and USDCAD one last poke lower so these are falling into line with the general expectation of a Dollar reversal.

Take care again today, sell into GBPUSD rallies.

Today’s free analysis is for GBPJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (5 pips plus one open position).

Have a great weekend.
Ian Copsey

Thursday, September 17, 2009

The major Dollar cycle low may well be seen today…

Some of yesterday I got along with and some I didn’t. However, the results of yesterday’s moves encourages me that the chances of finding a long term Dollar low are much, much closer and I’d even go as far as to say it could happen today or possibly tomorrow. For those who look for longer term positions be prepared to structure your entries and look for areas to increase positions as the Dollar begins to rally.

I shall go through the key levels that should provide the expected low in the individual analyses and the type of move that could develop ahead of this. Indeed, the reason I say the low may not come until tomorrow is that there is a risk that we could see some tight range trading today. If you look at the rally in EURUSD from the 1.4178-97 lows it is quite plain that the move is decelerating sharply and this is being reflected in the momentum readings.

The timing should come as GBPUSD finds its corrective high following the drop from 1.6738. Thus, here we shall already be into the stronger move lower after the first probe that reached 1.6406. Ideally (although the ideal doesn’t always occur) this should find its high at the same time as EURUSD.

Now onto USDJPY which I have found a little strange in its moves. Ideally it should not move above 91.70-80 and again extend losses to the lows and beyond. However, in general its moves have been correlated to those of USDCHF and therefore I am taking a neutral approach today. The confusion is the marginal new low yesterday at 90.12 which to me suggests another leg lower. Therefore make sure that we get a bearish reversal pattern here before committing.

The decline and recovery in USDJPY was reflected in the crosses also but here too I prefer a more bearish stance but not an excessive one – and this conflicts with the expected reversal in the Europeans. Thus, this whole group has some serious conflicts which heightens the need for care…

To cap it all even AUDUSD is close to its target while USDCAD continues to confuse but has yet to break below the 1.0640 low.

Today’s free analysis is for AUDUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (110 pips).

Good luck.
Ian Copsey

Wednesday, September 16, 2009

With several conflicts in the charts take care again but remember we are close to a cycle low

I think it was quite clear from yesterday’s outlook that there were conflicts that I just couldn’t absorb into a consistent view across the currencies and that became quite evident over the day. There were several examples of that developing over the day. USDCHF rallied to almost reach the 1.0422 high while EURUSD hardly managed much of a decline at all. Then a little later GBPUSD finally gave up its attempt to rally and dropped quite solidly below my supports. To cap it all USDJPY continued its push higher to 91.60 and really throwing out the wave structure I have held for several weeks.

So when USDCHF fell back from its highs and joined the Dollar’s weakness in EURUSD it began to look as if the Dollar was finally breaking lower. Indeed, that was what I was expecting to find when I sat down this morning to do the analysis.

However, I can’t say that I got too much feeling of continued Dollar weakness and for the most part I felt that a pullback is more likely. It is still fairly mixed and I wouldn’t want to hang my hat on either side at this point but prefer to watch the short term development to judge whether we’ll see direct losses for the Dollar or yet another frustrating pullback before it can finally get on its way.

Certainly, we should never forget that the daily and shorter weekly cycles are pointing lower right now for the Dollar and in the final stages so we must be aware that the larger risk is still lower. Once this goes then we can get to the final low and anticipate a stronger Dollar rally.

So for today the message is once again one of caution and being aware of what levels constitute breaks whether that be for a final pullback higher for the Dollar or whether we’ll see direct follow-through lower.

If I look at USDJPY the pullback to 91.60 was deep and does confuse. Daily momentum is still pretty bearish and therefore this still has downside vulnerability too and a move closer to the 87.10 low at some point over the next week or two where I feel we shall see a base for the third time.

Again, the message today is take care and watch levels closely.

Today’s free analysis is for USDCHF and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (20 pips).

Good luck.
Ian Copsey

Tuesday, September 15, 2009

Today requires some care though I have tended to side with an initial Dollar recovery before losses

I started the analysis this morning with some fixed views. I ended looking at the charts and muttering to myself “what a mess…” What had appeared straight forward has turned into a structure with as many twists and turns as a mountain road. Needless to say, this is going to require a great deal of care.

Let’s step back and consider the basic picture. I am Dollar bearish. That is understood but if I look specifically at EURUSD and USDCHF I feel that the pullbacks we saw yesterday stall around the right levels – maybe a bit short – but from this simple observation we could suggest the downtrend should continue directly. However, there is a guideline in Elliott Wave that deals with alternation between corrective waves. If you look at the marginal new (Dollar) lows seen yesterday these would fit pretty well into this scenario – although this morning these have broken but only marginally. If I have any preference it still is for a return higher to just beyond the Dollar highs seen yesterday.

One of the reasons I like this scenario is because I’d rather see GBPUSD back down at 1.6482… However, this morning’s recovery to retest 1.6629 is rather strange to say the least. On top of that USDJPY has refused to generate any weakness and I am watching this for an alternative structure that could see 91.40 before the decline to 89.52. This also suits the initial Dollar bullish preference within a correction in the larger downtrend.

However, AUDUSD looks firm and does suggest a push higher while the JPY crosses have seen moderately strong firmness. I’m not sure they have much further to go but here too there is conflict between the JPY-Europe and JPY-AUD pairs. So again the correlation one would expect is being threatened.

In summary, all I can say is that my preference remains short term Dollar bullish but if we see much more weakness from this point we may have to switch to pay respect to the medium term outlook which is still bearish Dollars – and this scenario would probably see some solid follow-through so best watch over your shoulder.

Take care and watch levels and implications carefully.

Today’s free analysis is for USDJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (0 pips).

Good luck.
Ian Copsey

Monday, September 14, 2009

We should see a shallow consolidation against the Europeans & new lows in USDJPY

Friday’s price action didn’t surprise me too much. The degree of erratic behavior does seem to be indicative of a lack of conviction in being too exposed to short Dollar positions – well, perhaps with the exception of USDJPY which once again caught me out with the directness of the losses. My underlying view and targets have not changed but the manner of Friday’s moves has offered a possible alternative route to those targets in EURUSD and USDCHF although USDJPY look like testing the ultimate target I had and probably today. GBPUSD may also do the same…

To begin on specifics… in EURUSD in particular I have spotted an alternate pattern and it will be good to take note of the alternatives and how to identify what is happening in the analysis. This may well lengthen the process of reaching the 1.4750-1.4844 target by up to a week. It shouldn’t change the expectation in USDCHF. GBPUSD is another one to be careful with as the structure could suddenly surprise and provide a further rally. The 1.6600-10 area seems important and only below 1.6550-80 would really confirm that the entire correction is complete. On the whole I feel we’ll end up with a high Dollar against the European block.

USDJPY has repeatedly taken a more direct decline that I had anticipated. The target hasn’t changed but whether we see direct follow-through today is unclear since there is risk of a sideways consolidation. In the larger picture, looking at momentum there is no indication of a larger reversal higher at this point and price development-wise there is still room for additional losses at a later stage and it would not be surprising to revisit the 87.10 area again over the next week or two.

This should limit the downside in the JPY crosses also for a while. These do still look bearish but close to running into a stalling point. Much will depend on whether the Dollar bearishness is seen across the board and to what degree as I feel that there may be an occasion today when the Dollar is weak against the Yen but not quite so much against the Europeans.

This will also depend on AUDUSD holding the 0.8609 low seen this morning after open as this is a critical support below which the risk will be much lower and to retest the 0.8516-45 area. USDCAD is a bit like a snake with two heads right now. I can see two larger scenarios but possibly more biased to the upside.

Today’s free analysis is for GBPUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (162 pips).

Have a profitable week.
Ian Copsey

Friday, September 11, 2009

We are close to an intermediate low in the Dollar so expect a pullback higher

Yesterday was a messy old day really though basically in line with the analysis for the majors with one exception – GBPUSD. It wasn’t all plain sailing for EURUSD and USDCHF with the first half of the day providing an exceptionally volatile move but with patience we saw the anticipated fresh Dollar lows although these didn’t really meet target. Well, USDCHF met the high-end of target but I feel that the decline still isn’t quite complete.

So today’s outlook is very similar but I really find it hard to think that we will not find the Dollar low today. Not only do the two core Europeans suggest this but also GBPUSD and USDJPY. To continue on the European theme, GBPUSD actually surprised me by failing to return to the 1.6454 low but actually rallied to new high and actually enough to suggest a complete correction to the decline from 1.7041. I write “enough” but even here I feel there is a risk of a marginal new high around the 1.6707-33 area.

And if I can switch the theme back to the expectation of a Dollar low then USDJPY is right in the group. I had thought when it bounced perfectly from 91.42 that it was going to recover all the way back to 93.29. At this point I can’t rule it out but I am very aware of a much larger bearish structure also. It’s touch and go but watch the first moves today – if the 91.42 level breaks – and at first that may only be by 4 pips – then the implication is for a drop to 91.21. However, that would end the first leg of the final decline in this downtrend from 97.87… If we get a double bottom and a push back above 92.03 then we’ll revert to looking for 93.29 again…

The JPY crosses look a little bit soft at the outset and I do anticipate a push lower but these still seem to be range bound so I don’t think we’re going to see significant weakness – and this tends to correlate with the general view of USDJPY recovering from an early dip…

AUDUSD is looking tired and I’m not confident of seeing another attempt higher while USDCAD should at least see a correction higher – and maybe a little more – but once we get back to 1.0825 we’ll have to be more careful.

Today’s free analysis is for EURUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (64 pips).

Have a great weekend.
Ian Copsey

Thursday, September 10, 2009

Again, today looks like seeing a marginal new Dollar low followed by consolidation

In some ways the Dollar behaved as expected but not quite. What has been bothering me of late has been the apparent disparity between EURUSD and USDCHF, the latter appearing to be lagging and still requiring lower lows to complete the segment of the wave structure which EURUSD was apparently targeting at 1.4554-86. The brief break above 1.4586 may not seem too much but it does tend to hint that the projected target was too short and using a slightly longer one would seem to place the two pairs back into correlation.

From this point of view I still think we’re going to get another Dollar low today – again, not by too much, but possibly around 1.4618-29 EURUSD and 1.0320-58 USDCHF. If these areas hold then we can begin to talk about a shallow pullback and probable range trading before the final leg lower.

What is a little uncertain is whether that push to new lows will come directly or whether there will be a slightly deeper pullback before this decline. If I draw any conclusion then I look at GBPUSD, which itself is in a correction rather than the end of a trending move, but with the general directional moves correlated with the other two. I suspect this will reach the 1.6616-33 area and to do so should make the move directly – and that is where I hang my hat. However, with this background we should be able to work our way around any eventuality.

USDJPY dipped below 91.94 and stalled at the upper end of the critical 91.42-62 support. There is still chance we can dip a bit further to the lower level but ideally I wouldn’t really want the 92.24 corrective high to break. I may be able to stretch that to 92.44. Ideally this pair should begin to recover either directly or from 91.42 and make its way back up to th e93.29 high and possibly 93.77. However… and isn’t there always… there is a disturbing potential bearish structure developing too that would imply direct losses… It doesn’t really fit in with the general structural patterns that tend to occur but it must be something that is understood. A break below 91.42 would be very bearish so take care.

Elsewhere the JPY crosses are looking more bullish but still perhaps with a hint of short term consolidation. Take care with these but if you see a clear break of resistance be aware that these can extend strongly.

Today’s free analysis is for GBPJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (99 pips).

Good luck.
Ian Copsey

Wednesday, September 9, 2009

Marginal new Dollar lows expected but range trading should follow

After so long warning that we’ll see the Dollar make new lows against the Europeans I missed the boat as the decline resumed earlier than expected. What’s more, it has come down so far I may have to move forward the expected major Dollar cycle low to as early as next week and probably no longer than two weeks.

However, today will almost certainly not see a repeat of yesterday in terms of the depth of decline. I do expect marginal new lows today but then a period of (probably) shallow consolidation. The target is a little uncertain since the respective targets drawn from different parts of the wave structure are pointing to a small target range rather than pinpoint. EURUSD has resistance around 1.4554-86 and USDCHF has support around 1.0385-00 (max 1.0358). From these levels I suspect the rest of the day will be range trading.

The only exception in the European currencies is GBPUSD which rallied just above the1.0570 projection to 1.6585 but from there appears to already be mapping out a correction lower and therefore is unlikely to move to new highs today. There will be one more but probably not until next week. In the meantime the choppy drift lower can extend to somewhere between 1.6387-1.6430 … and just take note of 1.6358 too…

Now, USDJPY gave me a surprise. I did not expect such a deep decline and it concerns that it has struggled to recover. Ideally I would still prefer a recovery that should extend above 93.29 and to the 93.77-93 area but the question is whether that will occur directly or whether we’ll see a complex correction dip below 91.94 to somewhere between 91.42-62 before rallying a second time. My preference is for a direct rally but it will be best to wait for a break back above 92.56… In terms of its underlying position I am still bearish and view the current recovery as a correction only.

AUDUSD soared and still has further to go on the upside while USDCAD collapsed and should still have further losses to come.

All currency pairs seem to point to a correction followed by a final Dollar decline and given where we are in the structure, as I mentioned above, the eventual time target appears to be between 7-14 days.

Today’s free analysis is for GBPUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (25 pips).

Good luck.
Ian Copsey

Tuesday, September 8, 2009

Watch for initial moves today that should identify the day’s likely moves…


Friday saw some twists and turns but proved to be an interesting day with a few breaks that have added weight to my overall view although yesterday’s moves have required some short term adjustments. The moves in EURUSD and USDCHF on Friday were close to perfection but the follow-through yesterday took me by surprise and it is this which needs some due care & attention.

On the whole I’m looking for the pullback to continue – for EURUSD to reach closer to 1.4238-68 and for USDCHF to 1.0650-60. Tentatively from these areas we should see the underlying Dollar downtrend resume. These appear to be quite timely for the larger picture which is looking for a Dollar cycle low by around the end of the month and possibly into early next.

GBPUSD has its own agenda right now but I doubt we’ll see this much below 1.6275-85 (if at all.) Once this has been seen I feel we’ll be looking for another leg higher in the larger correction to the decline from 1.7041.

USDJPY… well, that was rendered almost untradeable for a while on Friday with the whippy move in early NY trading. I think it has a good chance of continuing to be rather whippy. As long as it doesn’t dip below 92.80 this morning I feel we’ll see 93.43 first – then it can move back to 92.59-69 thereafter. Whichever happens (first to 93.43 or directly down to 92.59-69) this should form a base for another push higher within the larger correction.

This should keep the JPY crosses in a trading range. I feel overall the picture is still just a little higher in these but the short term is rather shrouded in a range of potential outcomes so we need to treat these with care.

AUDUSD has resumed its uptrend but may be seeing a small pullback today. I feel that we’ll be heading over time towards the 0.8743-74 area at least and in the mean time the 0.8490-10 area should hold any correction. USDCAD has collapsed and the decline is expected to continue over the coming days.

Today’s free analysis is for AUDJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (50 pips).

Have a profitable week.
Ian Copsey

Friday, September 4, 2009

The European range trading should continue

With Monday being Labor Day holiday in the States the next report will be on Tuesday

So, we had a low in USDJPY that was confirmed on the break of 92.30-35. This will still be just a correction and I suspect we could get as high as 93.93-94.34 so it’s now a matter of navigating this correction. Of course the price development here has been painfully erratic and it’s rather difficult judging the correct critical turning points with so many ups and downs. However, the natural first resistance is at 93.05 and ideally I’d like price to get a little closer to bring the first rally to a halt. There is half a chance we’ve seen it already at 92.77 so be aware of the risk of a pullback at any time…

EURUSD and USDCHF performed the best and seem to confirm a triangle developing in both that should last through to Monday. The good news is… once this is done we will set ourselves up for a solid bearish Dollar follow-through. I remain with eventual targets of 1.4844 EURUSD and 1.0040 USDCHF and I suspect these can be achieved by the end of the month or possibly a little into next month. However, for today and Monday they should both remain confined to ranges – and for the most part that should provide a bullish Dollar today.

GBPUSD ended its rally a little early and if the assumption that it the movements here will be correlated to EURUSD then we’re going to see the correction lower continue today. However, I can’t see this progressing beyond the 1.6236-62 area. Following that we’ll either get a sideways move or even a possible marginal new high before reversing lower again. Overall there isn’t a lot of upside available here and overall I’ll be looking for the 1.6577-1.6651 area to cap the correction over the coming weeks. However, this could be particularly choppy so take care.

I should make a note about the JPY crosses also. I am rather in conflict here as I see USDJPY rising (erratically) while EURUSD should see more direct gains next week and as mentioned GBPUSD too, but also erratically. This tends to point to higher JPY crosses although I have to admit some confusion between momentum (which also seems strained on the downside) and I feel a marginally only bullish potential as I count this as a correction. Something here has to break so keep this in mind.

Today’s free analysis is for USDCAD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (open position).

Have a great long weekend.
Ian Copsey

Thursday, September 3, 2009

USDJPY should begin its correction higher today

Yesterday was pretty close to the sort of moves I had basically expected with one or two deviations. It was always going to be a difficult one to judge since there were too many corrections within corrections where retracement levels can span across different ratios. However, overall I’m encouraged and there does seem a basic pattern under development in the majors at least.

First and foremost… USDJPY has broken below 92.03 but has yet to reach the 91.70-74 area. From the look of the decline from 93.43 and specifically from 95.03 the targets seem to be converging at the 94.70 area – give or take 15 pips. From the “give and take” I’d tend to err on a little lower but at the most 91.56. The only slight spanner in the works is that momentum on all levels is beginning to lose clarity in the bullish divergences and there is little to go on using patterns. The best outcome would be for the rest of Asian trading to remain sideways to bring a little relief to the negative momentum. However, even with the concern over momentum I still feel the 91.55-75 area is going to provide the low here…

EURUSD and USDCHF both have very similar patterns and frankly I don’t think we’re going very far with these. Potentially today could see a little extension of yesterday’s (Dollar negative) price action but I think we’ll end up back within the range and this could continue into the end of this week – probably Monday too being a U.S. bank holiday.

GBP… well, this one beat me. I did say that it has reached a key support but the slightly lower low I had favored didn’t come about. The stronger rally has me considering the potential that the downtrend is complete. It’s early days yet and only a break back above 1.6621 would confirm the reversal. I feel today we could see a second push higher to tease levels just below 1.66 – and may remain below 1.65. But that will be enough and cause another push lower and then we hold our breath to see whether it can remain above 1.6113…

AUDUSD – the 0.8370-80 area is the key to further strength. Until that breaks the downside risk remains. Approach this carefully as any push below the 0.8241 low would take it back to 0.8157…

Today’s free analysis is for USDJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (2 pips).

Good luck.
Ian Copsey

Wednesday, September 2, 2009

There are a few things to catch us out today so caution is the by-word

The call of the day was the peak at 93.46 USDJPY. Well, price fell short by 3 pips and that has sent price lower and having had a good look I am reining back the more bearish target (at 90.77) and that means we are looking at an intermediate target at 92.03. This should provide a reasonable pullback though this will still be a correction and not a reversal to the underlying downtrend. However, once we have identified the corrective peak I’ll be able to provide some better idea as to where this will finally find a low. At this moment in time I’d estimate it to be around the 90-91 area. High for today should be below 93.00-10 now.

Now, while I had suggested that we could see some Dollar strength here it actually turned out to be more than I had expected… I don’t really want to change my medium term view at this point but I do want to be just a little cautious. Without going too deep into Elliott structure the corrections there remains one small risk. While the nature of the correction thus far has done enough both structurally and also in extent, it is one of those situations where one more push could be seen.

Normally I’d call for the Dollar highs here – and tentatively in EURUSD and USDCHF this may just work – but in GBPUSD I feel there is probably one more low to come. Thus we’ll need to watch the relative movement of GBPUSD against the others in what should be a pullback (and hopefully reversal in EURUSD & USDCHF) but we should find GBPUSD lags behind. Maybe by tomorrow we should see this new low in GBPUSD around 1.6020-40 (but no lower than 1.5982) and from there a stronger recovery is intimated.

Therefore, it may be that the Dollar may resume the downside but without too much strength today and we’ll have to wait until tomorrow for the stronger losses to develop.

Indeed, the JPY crosses still look bearish overall but there are bullish divergences developing in the 4-hour and hourly charts and I feel this is a warning that the downside is limited. Well, that’s for EURJPY and GBPJPY but AUDJPY still has a rather bearish outlook still. This caused me some confusion as I have been bullish AUDUSD. Having had another look I feel there is definite risk that we may have seen the top at 0.8476 and the medium term outlook is bearish. However, I feel this may be a choppy decline so we’ll have to take that stage by stage. However, the message is – watch AUDUSD carefully as there are signs that all is not well…

Today’s free analysis is for USDCHF and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (60 pips).

Good luck.
Ian Copsey

Tuesday, September 1, 2009

First moves today will tell whether we’ll see resumption of Dollar losses or consolidation

When considering the European currencies I’m really not too sure what to make of yesterday’s moves. Overall I remain Dollar bearish but I can’t say that the limited range trading we saw has completed a correction or whether there is more to go. I suspect the latter and feel that we could actually see the Dollar mark a marginal new high. Again I feel we should be observing the first move to confirm this preference…

However, always keep in mind that Dollar losses should be coming along before too long. Once it does break I feel that the argument is stronger now for a more sustainable follow-through so keep this in the back of your mind.

USDJPY did see further losses but not as much as I’d anticipated and has got me back considering the 92.03 target once again. Therefore the immediate target still seems to be in the 91.74-92.03 area but as always the first problem to overcome is just where the current pullback will stall. It may well have found its high at 93.31 but I also see 93.46 as an ideal stalling point – so it’s more about whether we wait for 93.46 and possibly miss jumping on the next ride lower.

Where this ends, that is either 91.70 or 92.03, has a big impact on the eventual target. The JPY crosses all look a little more on the soft side as the day starts but there are still some obstacles to overcome. Thus, be aware of the larger downside risk and look for an opportunity to jump onboard.

AUDUSD has been choppy and this looks as if we could be seeing a sideways consolidation. The larger picture still points higher but be prepared for a 0.8360-0.8457 range first. USDCAD pressed higher sharply but then, as it does so often, whipped back lower. We could see some initial losses but I don’t think by much but more likely we will soon see a pullback within a larger leg lower to around 1.0800-18.

Today’s free analysis is for EURUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (195 pips).

Good luck.
Ian Copsey