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HARMONIC ELLIOTT WAVE

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

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