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HARMONIC ELLIOTT WAVE

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

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