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 along with yesterday’s trade set ups (110 pips).

Good luck.
Ian Copsey

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