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 along with yesterday’s trade set ups (99 pips).

Good luck.
Ian Copsey

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