Wednesday, September 16, 2009

With several conflicts in the charts take care again but remember we are close to a cycle low

I think it was quite clear from yesterday’s outlook that there were conflicts that I just couldn’t absorb into a consistent view across the currencies and that became quite evident over the day. There were several examples of that developing over the day. USDCHF rallied to almost reach the 1.0422 high while EURUSD hardly managed much of a decline at all. Then a little later GBPUSD finally gave up its attempt to rally and dropped quite solidly below my supports. To cap it all USDJPY continued its push higher to 91.60 and really throwing out the wave structure I have held for several weeks.

So when USDCHF fell back from its highs and joined the Dollar’s weakness in EURUSD it began to look as if the Dollar was finally breaking lower. Indeed, that was what I was expecting to find when I sat down this morning to do the analysis.

However, I can’t say that I got too much feeling of continued Dollar weakness and for the most part I felt that a pullback is more likely. It is still fairly mixed and I wouldn’t want to hang my hat on either side at this point but prefer to watch the short term development to judge whether we’ll see direct losses for the Dollar or yet another frustrating pullback before it can finally get on its way.

Certainly, we should never forget that the daily and shorter weekly cycles are pointing lower right now for the Dollar and in the final stages so we must be aware that the larger risk is still lower. Once this goes then we can get to the final low and anticipate a stronger Dollar rally.

So for today the message is once again one of caution and being aware of what levels constitute breaks whether that be for a final pullback higher for the Dollar or whether we’ll see direct follow-through lower.

If I look at USDJPY the pullback to 91.60 was deep and does confuse. Daily momentum is still pretty bearish and therefore this still has downside vulnerability too and a move closer to the 87.10 low at some point over the next week or two where I feel we shall see a base for the third time.

Again, the message today is take care and watch levels closely.

Today’s free analysis is for USDCHF and can be found on along with yesterday’s trade set ups (20 pips).

Good luck.
Ian Copsey

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