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HARMONIC ELLIOTT WAVE

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

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