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HARMONIC ELLIOTT WAVE

Friday, October 30, 2009

The reaction by the Dollar has been strong but I’m not sure we’ll move directly to the lows

The Dollar did exactly as ordered against the Euro and Swiss Franc and the move actually became much stronger than expected. That it reached the levels it did in the decline doesn’t surprise but the lack of significant correction in the process was just a bit strange. This has me just a little on the defensive, at least aware of possible shenanigans that could trip us up…

To explain… Well, the Dollar highs we saw yesterday should be the full extent of the correction and in the position I think we’re in the implication is a direct move to new lows as I have outlined before but then for a much larger correction. Now, the structure I think I’m seeing in yesterday’s decline appears to be corrective rather than signalling new lows…

What this may mean is that we could actually retest the lows but then head straight from where we came… In general I do seem to feel that there we should see further losses after a correction early in the day and we’ll have to watch how deep this is. I suspect it will not be by too much. If so, then it will add weight to my argument.

Even USDJPY as a slightly uncertain look about it for exactly the same reason but I’m not sure this will reach 92.31 again. It’s possible but we’re going to have to be cautious. This view appears to be supported by the JPY crosses in which the rallies yesterday also appear to have a corrective structure.

Therefore, follow the trend for now and sell in to Dollar rallies but do take care if we approach the recent lows.

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 (+160 pips) and the new review of the support & resistance levels issued in the daily report.

Have a great weekend
Ian Copsey

Thursday, October 29, 2009

The Dollar corrective high may well be in place against EUR & CHF

Well I got what I had looked for, EURUSD a little lower but within the boundaries of the anticipated correction lower and thus I think today we’ll see the Dollar move lower again. There may still be a little more playing around at the 1.4674-84 lows in EURUSD and 1.0283-1.0318 highs in USDCHF but that should be it.

I’ll say it now – but if these areas break I’d have to consider the possibility that we saw the major lows and we’re due an even bigger correction. I think it unlikely and feel this should come after the next drop. However, best keep this in the back of your mind.

USDJPY has also declined towards its targets and here we need a little more leeway. I’d still prefer the 90.07-16 area to support as this is a crucial divider between the two scenarios. However, even if it breaks I don’t see an aggressive follow-through with 89.43-65 the next larger supports. Both scenarios should end up with a move to 92.89 minimum and maximum 93.74-04.

So, this should also mean that the JPY crosses should pick up as well. Momentum wise they’re sitting on rather shaky hourly bullish divergences but on the assumption that both USDJPY rallies while the Dollar loses out elsewhere then the crosses appear the best avenue for profits. The only uncertainty is whether the possible extra dip in USDJPY occurs which could delay the process.

I think we may have to be careful with AUDUSD also. While a bullish divergence can be seen in the hourly chart it’s not very strong and I have had more problems trying to identify the right structure here and therefore there may still just be a little more slippage. Thus take care.

Today’s free analysis is for EURUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (0 pips) and the new review of the support & resistance levels issued in the daily report.

Good luck.
Ian Copsey

Wednesday, October 28, 2009

There seems to be one more leg higher in the Dollar vs EUR and CHF

Well, the Dollar has done enough to satisfy a complete correction against the Euro and Swiss Franc. That’s not to say it won’t rally a little more and indeed I see a distinct risk of this but if there is one more attempt higher then the 1.4700-10 EURUSD and 1.0300-10 USDCHF areas appear to be the highs I’d expect. However, from this point onwards we must acknowledge that a move back into the Dollar downtrend can occur at any time.

Interestingly, having been the darling for bears, GBPUSD has made a gallant effort to remain in a tight trading range instead of following EURUSD lower. Therefore the next move lower in the Dollar is going to be interesting as I do look for marginal new Dollar lows for its European compatriots I am not really in favour of this happening against in GBPUSD… It’s going to mean some pretty awful corrective patterns by the look of things… and I still can’t rule out another low in GBPUSD since the rally hasn’t been particularly emphatic.

USDJPY still cannot make it higher… I’m finding this one really very, very frustrating. The structure is made up of very choppy moves which make identifying the correct structure pretty tough. Indeed, with the high at 92.31 and just below the key 92.55 area it may well be that the market has fighting off any breach of that 92.52 high. I do believe it will come although not by too much, but the process of getting there has been nothing short of painful. I do see support around 91.37-49 and while I don’t really like the manner of the decline, if it can hold above here there is one final chance it could reach 92.52 and maybe even above. If this support area breaks then we’ll be seeing a full correction of the 88.00-92.31 rally…

If I look for any clues in the JPY crosses then I can’t really find that much. The strongest picture I see is in EURJPY but this reflects the anticipated additional low in EURUSD and then a recovery. And if there is any common ground that I see in the crosses it does seem to have some downside risk though I don’t think (at the moment) that this is going to be excessive. Therefore take care with these in general.

Today’s free analysis is for USDCAD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (97 pips) and the new review of the support & resistance levels issued in the daily report.

Good luck.
Ian Copsey

Tuesday, October 27, 2009

This could be a tough day…

It seems I held on too long looking for one more dip in the Dollar before the correction. Yesterday’s breaks of key Dollar resistances provoked a sharp follow-through higher and now we’re left a little in mid-air. I do feel that what we are seeing is a correction but quite where this will stall is going to be a little tough to establish at this point given that the Dollar rallies displayed few clues as to the structure. However, I don’t think it’s over quite yet as I’d like to see daily momentum recover a little so that on the next decline we should have the comfort of a bullish divergence.

So the risk is for a rather choppy day – more than most of yesterday turned out to be – but remember we are correcting the rally from 1.4480 to 1.5061 and the decline from 1.0452 to 1.0032. The next targets are going to be between 1.5153-1.5200 EURUSD and 0.9870-0.9932 USDCHF so we’ll have to look for an area where the next extension lower will get us close to these areas…

USDJPY didn’t quite work how I had expected but not too far away. The rally today to 92.31 has the look of a complex correction so the next move could well be back to yesterday’s 91.57 low, possibly a little lower but stalling between 91.22-46. Now, the implication of the 92.31 high and pullback (assuming I’m right) is actually a little more directly bullish than I had thought and implies a move above 92.52 and possibly to the 93.18-50 area… However, even here I feel this is just a correction and once this correction is complete the risk will turn lower again…

Elsewhere the JPY crosses are pretty much in the same boat as the general Dollar view. These sharp moves make it difficult to recognize the structure and we really need a few more strategic highs and lows to start to make something constructive. Overall I feel the pullback higher is probably the stronger argument but take care in all of these.

Today’s free analysis is for USDCAD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (97 pips).

Good luck.
Ian Copsey

Monday, October 26, 2009

This last leg lower in the Dollar looks like it’ll take another day or two yet…

Friday proved to be a little of a wash-out … well, apart from GBPUSD that is… To start with that story, the peak came in a little lower than anticipated which was really quite annoying with the decline reaching my target very, very quickly. It should be finding low now – and this morning’s 1.6251 low may well be the final low as I doubt we’ll see a break of the 1.6240 swing low on the first try. That means we’ll probably see a choppy recovery over today and possibly a bit of tomorrow.

This actually fits in well with EURUSD and USDCHF which decided on my alternative scenario with the correction recycling. I still feel we’re going to see the Dollar bottom out soon and from the movement we have seen so far it looks like it’s going to be a slow affair – as in GBPUSD – likely to take until the end of today at least and possibly into the middle of tomorrow. The final targets are at 1.5147-53 EURUSD and possibly somewhere between 0.9971-00 (max 0.9932) before we see a stronger – but not excessive correction higher.

Funnily enough, this seems to fit in with USDJPY also. Not quite in the same way as the strength in the JPY crosses has forced USDJPY to be negatively correlated with the Europeans. I think this is going to continue once the JPY crosses have reached their targets and the USDJPY rally ends around the 92.47-62 area.

It seems therefore if you want a bigger bang for your buck then selling the JPY crosses should provide greater return over the course of the week…

The market’s recent favorite, AUDUSD has clearly shown a reluctance to be pushed higher in quite the same aggressiveness as before and that too is not too far from a reversal. This has a couple of alternatives but a restraining factor is AUDJPY which does seem to be struggling and it’s difficult to see this reaching above 85.72…

However, as a summary, given the anticipated sluggishness it would seem like the best approach is to either wait for the targets to be achieved or if you want to trade don’t hang on to the position for too long…

Today’s free analysis is for GBPJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (35 pips).

Have a profitable week.
Ian Copsey

Friday, October 23, 2009

We should see extension to new lows before a larger reversal

There is no change to my expectation of seeing what should be a significant reversal in the Dollar’s underlying downtrend. However, whereas before I had considered this likely to be a total reversal it now looks like being only for a correction. Even then I feel this will be for a correction only and a new low should be expected later.

I spent some time looking over the daily charts in an endeavor to identify the adjusted wave structure and it seems that we are still in the final leg lower of this particular descent and it is conceivable that we may just find that low today or maybe Monday as long as we do not see yesterday’s correction recycle.

The first half of the day should see a correction to the decline into this morning’s Dollar lows and this is where attention need be placed to judge whether there will be a retest of yesterdays’ corrective highs. The eventual targets are a little lower than the extreme target I had before but we’ll need the shorter term momentum picture to behave itself to have those targets marched with Dollar bullish divergences…I will outline those targets within the individual analyses.

USDJPY is a slightly different matter. It has really failed to show much enthusiasm for extending its rally to the 92.25-52 area. It still has one last chance but unless it manages to overcome the 91.78 resistance we may well find ourselves looking at 90.07 once again. Even then I’d consider that part of a correction still and I remain with the bullish outlook.

The JPY crosses remain underpinned but closing in on their targets and they’re not too far off now. However, momentum is still looking very robust and this is almost certainly going to generate gains above my targets and probably to the old high in EURJPY but probably then a pullback at least. So we’ll have to see whether USDJPY has the power to take these high or whether they will stall as the Dollar corrects higher.

Today’s free analysis is for AUDUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (100 pips).

Have a great weekend.
Ian Copsey

Thursday, October 22, 2009

Targets met… but are they really the final lows?

I have been following this bearish Dollar structure for some time as you will know and yesterday saw my targets in EURUSD and USDCHF met. It’s always nice to hit them pretty close to the pip and those levels prompted a sharp pullback… well, a small one anyway. As the saying goes, it’s not over until the fat lady sings. Actually, I can’t hear her…

It’s not uncommon to see targets met so nicely but then hit snags. Yup, it’s snag time. For both these currencies the daily momentum is at extremes – no Dollar bullish divergences. The 4-hour momentum looks like a divergence but in EURUSD it is still very low – and that normally doesn’t happen. In USDCHF it looks more healthy but hasn’t really turned up nicely. The hourly momentum readings are not strongly Dollar bullish either…

From the daily readings I have to assume that there is still another low to come and from the intra-day this looks the same. I do expect a larger correction to develop very soon and we’ll see how this impacts on the daily momentum but I am pretty certain that the lows we are about to see are not going to be the final ones…

Overall the different currency pairs appear a little disengaged and we could find reactions are going to be slightly different. However, for the moment I think we have to remain Dollar bearish – and this may also include USDJPY in a recycling of the consolidation. However, the JPY crosses still look positive in the main picture. Whether we’ll see direct follow-through is unclear and a correction is possible but I feel we’ll have to handle these through break levels.

However, I feel we’ll get some good trading levels out of this either today or latest tomorrow.

Today’s free analysis is for EURJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (20 pips).

Good luck.
Ian Copsey

Wednesday, October 21, 2009

It looks like we’re in the last leg of the last leg lower… but take care the reversal can now occur at any time…

So far the Dollar’s decline into the cycle low against the Euro and Swiss Franc has been proceeding pretty much to plan with yesterday’s levels holding well. It certainly took it’s time dipping from the 1.4992 high and that has dragged the final low into today – of course that is if it doesn’t go into another long and painful sideways range.

To reiterate, the targets remain at 1.5038-72 EURUSD (I favor the lower) and 1.0020-40 USDCHF.

However, I should add one point of caution. Already we have significant Dollar bullish divergences across the board. Yesterday’s pullbacks (especially in EURUSD) have reached levels that must hold. If somehow I have made an error with the last move which would imply yesterday’s Dollar lows were the final ones then a break through the pullback extremes at 1.4882 EURUSD and 1.0167 USDCHF will provoke the cycle low earlier and this move is likely to be robust if seen…

I have the same problem with GBPUSD. I’d like it to make one more hike to the upside with the 1.6576-98 area the target. However, a drop below 1.6323-28 and then the 1.6240 swing low would open up the downside in a large way…

USDJPY bounced nicely from the 90.07 support. This should now make its way higher and I’d like to see this now move up to the 92.25-52 area. The manner in which this rally develops is going to be important too. The 92.52 swing high being the last major swing high represents the doorway to stronger gains here. I have two wave counts that appear to be holding – and coincidently had support at 90.07. The 92.25-52 area should hold on first test and the difference between the two scenarios will be in the pullback – but also it should show in the structure of the rally. If the more bullish count works then we’ll be talking a test of 93.15 after this and that will still not be the high.

Equally, the JPY crosses need to clear current resistance levels to extend to the preferred targets as well…

Today’s free analysis is for GBPUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (56 pips).

Good luck.
Ian Copsey

Tuesday, October 20, 2009

We should now see the Dollar cycle low today or at latest tomorrow…

We appear to be one step closer to the targets I have been indicating for some while. In fact there may only be one more step to go and this could conceivably mean it will come today and at the latest tomorrow. Well, such comments are always there to be knocked off the pedestal so as always let’s make sure that all the necessary evidence is in place first.

The only target that seems to have changed is in EURUSD and there seems little chance that we’ll see the 1.5119 target. Do keep it in mind still if USDCHF hasn’t reached its 1.0040 target but the alternative target area appears to be at 1.5038-72. Indeed, if anything the 1.5038 area seems a pretty popular area for several projections and only one of them would imply that it is only an intermediate stop.

We have Dollar bullish divergences in place in the daily and weekly charts and we now have to see these develop more strongly in the hourly and 4-hour charts. The potential is there and with these in place at the right stalling areas then the evidence becomes stronger.

GBPUSD on the other hand needs to remain above 1.6346-68 to retain a direct assault on one of two target areas. These are at 1.6539-54 and 1.6587-97 – or at least appear to be the most likely targets. I do have 1.6731 also but while it is an attractive target it will need to outpace its European buddies to reach that far. However, hourly and 54-hour momentum is becoming stretched so we should expect a reversal her also.

USDJPY has struggled a little and may do so a little more with what appears to be threat of a further decline to the 90.07 support or at most 89.66-77 before the next leg higher. If this occurs at the same time as the Dollar lows in the Europeans then more power to the eventual signal.

The only thing that concerns is that the JPY crosses are struggling a little. I’d like to see one further push higher but I’m also aware that the correction we saw yesterday may well recycle – so then we’ll need USDJPY to react higher quicker than the Dollar does against the Europeans. The trouble with trying to anticipate the crosses is knowing which of the individual components of the cross will generate the move so we’ll have to take some care here…

Today’s free analysis is for USDCHF and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (130 pips).

Good luck.
Ian Copsey

Monday, October 19, 2009

The Dollar-Europe downtrend is getting stretched but I remain bearish

The Dollar has opened the new week with a slight swagger. Currently it is pushing below the 1.4842 EURUSD low and Friday’s high in USDCHF at 1.0223… It doesn’t fill me with confidence in the quest for a final Dollar low but this move is deeper than I would normally expect but not quite yet enough to totally confirm the cycle low… Last barriers are at 1.4820 and 1.0234 respectively … but even then it is unusual.

GBPUSD & USDJPY remain range bound and if I have any preference I still feel we should manage one further high. However, what is unclear here is whether that occurs directly or after a deepening of the current correction.

In the larger picture I do still look for a Dollar low and this week looks like having a strong potential to provide that reversal level. I’d like to hang on to that expectation but all the while knowing that there is now very little “wiggle” room for the decline. Hourly & 4-hour momentum haven’t really signaled that reversal yet so let’s keep an open mind.

Even AUDUSD looks pretty tired this morning and that is dragging down the JPY cross this morning but there haven’t yet been any breaks of key swing lows yet. Indeed, EURJPY and GBPJPY do still seem to have another leg higher at least with 4-hour momentum having failed as yet to provide a bearish divergence.

So if I have any real advice today it is to watch key Dollar (-European) resistances carefully and I feel erring on the Dollar negative side for one final drop. However, always be aware that the Dollar cycle low is very close now I feel and when it comes we could be surprised with the strength of the move.

Today’s free analysis is for USDJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (100 pips).

Have a profitable week.
Ian Copsey

Friday, October 16, 2009

EURUSD & USDCHF are still on track… USDJPY and GBPUSD are seeing a crazy correction

What can I say..? GBPUSD provided the biggest shock of the day with the sudden and crazy rally that has continued this morning. This is a correction but normally these take a more sedate route. On this occasion it’s more like a Japanese tour group on the Shinkansen taking photographs as tourist attractions flash past the window…

It’s this type of move that provides the most difficult of all analyses as the waves are all running along with virtually no corrections of any size. Thus I’m going to have to be approximate but see several areas where I feel we should be more cautious. If I look for any guidance then it comes from the calmer continental Europe with EURUSD and USDCHF basically on the right path to reach my projections though I clearly have found the pinpoint wave structure just a bit tough.

However, I feel we’re close to the end of the move and I have no real reason to change the targets I have given already. We may have to be careful a little bit below the 1.5119-35 target as the correction to 1.4842 does make the favored target a little high but as the Dollar weakens here I feel we need to look more closely for signs of a larger reversal. Hourly momentum is still bearish but the 4-hour is beginning to develop the potential for Dollar bullish divergences.

USDJPY also broke higher, probably a factor of the push higher in the crosses. I have a few ideas here and shall highlight the areas where we need take care. I should say that until 92.52 is broken the daily bullish divergence is not confirmed. If this breaks then it would mean the cycles have turned bullish and as long as the Europeans turn then we should plan more to buy in dips.

Indeed, it is the identification of the Dollar cycle low and specifically the attainment of the targets that would possibly give us the strongest clue as to when GBPUSD is going to suddenly look around in the thin air of the upper stratosphere and decide it needs the richer oxygen of lower levels…

Today’s free analysis is for EURUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (80 pips).

Have a great weekend.
Ian Copsey

Thursday, October 15, 2009

Today should see some consolidation, a new low and then a correction

Having made a direct move lower the Dollar has continued to show its hand and seems pretty well set for my target areas. The decline is not going to come in a straight line but there only seems one more major correction before we finally get to see my goal.

First of all, while not clear cut, there does seem risk of consolidation in Asia and that would come as no surprise but once this is complete look for the Dollar to lose out a bit more to 1.5006 EURUSD, 1.0066 USDCHF and 1.6047-65 GBPUSD. From those areas a correction should ensue and we’ll have to be aware of the chance that this could be a sideways range trading correction. It should be enough to set up Dollar bullish divergences in the 4-hour and hourly charts to match the daily & weekly momentum picture…

Once that is complete then the final leg in the decline should be setting itself up with targets as I indicated in yesterday’s report. As long as there is support from indicators I feel the coming Dollar lows should see quite a solid reversal.

For GBPUSD the coming peaks still only represent a correction within its own larger downtrend. The 1.6125-1.6169 resistance is probably the clearest of all signals with a target already in place at 1.5456.

USDJPY broke lower but hasn’t cleared the 88.64 support. The pullback from the 88.83 low has been unusually deep which should still suggest we need be careful but this is true for both sides of the market. Quite possibly we’ll see a sideways range develop and it’s going to take a break of 88.64-83 on the downside and 89.78-89 on the upside to make its final intentions known.

The JPY crosses still look firm but this could well be absorbed by the weaker Dollar versus the European currencies while USDJPY holds within a range. My preference remains for a move down to 86.67-87.10 before the final, stronger reversal higher…

Today’s free analysis is for AUDJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (22 pips).

Good luck.
Ian Copsey

Wednesday, October 14, 2009

It looks like we shall see direct resumption of the Dollar downtrend…

The moves in EURUSD and USDCHF were not quite as expected and it’s probably obvious that I’m rather surprised with the outcome. The charts are as complicated as ever as I try and see where the correlation lies in terms of whether this signals direct follow-through lower for the Dollar or not. It is certainly the weakest side as there can be no argument as to where the trend lies and as such it’s the direction that should be favored until proven wrong. Given the time frames of the cycle low I have been looking for there just doesn’t seem enough time to see a deeper pullback and then the follow-through.

Indeed, in EURUSD and USDCHF this can be seen quite obviously and may well provide the basis for GBPUSD also. Its failure to break below 1.5700 and the firm recovery only has a little more to go to re-open the case for a move back to 1.6125-69. That would be my ideal outcome. For me the evidence is 80% complete and if there is any level that can hammer the nail home then it’s a break above 1.5949-82. Get this out of the way and look for the rally to follow-through.

However, in USDJPY it leaves me a little flat-footed. I like the 90.45 resistance as I indicated in Monday’s update but I find the structure of how it got there not quite so supportive for a case arguing a top. It bounced nicely from the 89.29-49 support yesterday that would keep the bullish structure in place and thus we can use this as an indicator of follow-through lower. The 86.70-87.10 area still looks possible but the bullish divergences in daily & weekly charts are begging for a reversal – it’s just a matter of when…

To confuse the JPY situation even the JPY crosses have drummed up a structure that, as long as we see a little more on the upside, could generate new highs. However, it would be best to wait for breaks of those highs and the levels we have reached are quite critical and we do have to watch over our shoulders for the risk of a return lower…Therefore to judge USDJPY we have to look at a combination of all parties and in particular take note of when the JPY crosses break down and begin to ease lower again…

Today’s free analysis is for USDCAD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (open trades).

Good luck.
Ian Copsey

Tuesday, October 13, 2009

It could be a choppy day today… take care…

Friday’s analysis for the majors broke down in a big way, though the levels sent for the majors yesterday basically held with the exception of GBPUSD. I had thought I’d be writing today how I felt we’d see the Dollar extend its losses directly. Well, yesterday’s stunted move seems to have put that expectation under threat.

With GBPUSD having gone the opposite way I’m back with the issue of conflict in the correlation with EURUSD. It’s not impossible that they could travel in opposite directions for a while but at this point it would imply a huge move in the GBP crosses and thus I’m trying to see where the fit may come…

I am beginning to feel that the move higher in EURUSD which I had expected on Friday may well have come in a different way. I can see resistance in the 1.4829-39 area while USDCHF could absorb a move down to 1.0208. Both of these outcomes would then imply a pullback to yesterday’s corrective levels and a bit more – with the 1.4650 EURUSD and 1.0358-75 area USDCHF. The critical part here is how GBPUSD reacts. I can see support here at 1.5689 and 1.5633. While these hold I cannot rule out a rally that could go all the way back to 1.6125…

So let’s see how this fairs and try and work trades around this.

For USDJPY the peak at 90.45 was perfect… except it came too directly and destroyed the near term structure I was using and may well imply a deeper pullback higher. Support at 89.29-49 seems critical here and while it holds I can’t rule out a deeper thrust higher to 90.74-88 and 91.09 is not out of the question. However, I’d still look for losses thereafter…

In the JPY crosses EURJPY has another leg higher to come, GBPJPY is teetering on the brink and subject to what GBPUSD does while AUDJPY also has a little further to move higher but the question remains whether this will happen directly or after a pullback.

Today’s free analysis is for GBPJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (90 pips).

Have a profitable week.
Ian Copsey

Friday, October 9, 2009

We should find the Dollar finds an interim low today…

With Monday being Columbus Day holiday in the U.S. the next report will be on Tuesday

Yesterday’s new high in this rally for EURUSD has just about confirmed with a very small risk that it is headed above 1.50 and probably 1.51… but not today. I feel it has potential to be a topsy turvy day today with the first move looking to be for a retest of the 1.4719 low only to see reversal to the higher target at 1.4865. Once this has been seen we should get a correction to the entire rally from 1.4480 and this fits in with what should be a lack luster day on Monday.

However, once the correction is complete next week could well see the rally to the 1.5119 level at least. My only caveat is that if we fail to see the current decline reach 1.4719 then it’s not impossible that the rally will come earlier. Take this as the basic templates to use when looking for direction today.

I spent some time trying to make sense of USDJPY and I feel I may have found the answer. As you know I have been looking for a cycle low around now but it has been hard tying down just where this will stop. Thankfully, in line with EURUSD (and the anticipated decline to 1.0040 USDCHF) the end of this current move is in sight. I feel the current risk is sideways with a small risk of seeing 87.92 but then lower to 87.40 followed by a correction before the final decline with the favored target being just below 87.10 – at 86.60-80. Let’s see if this basic structure develops and if we then see the expected target we have more confidence in looking for a moderately long correction. However, note that final description… it will be just a correction…

Funnily enough, and this wasn’t really what was on my mind, the JPY crosses look quite firm. We still need breaks of key levels but if this occur then we could be seeing the upside coming under pressure.

Equally, I’m looking for a high in AUDUSD around 0.9121 and a low in USDCAD around 1.0442-68. Just be careful of interim consolidation.

Today’s free analysis is for AUDUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (-20 pips).

Have a great long weekend.
Ian Copsey

Thursday, October 8, 2009

Watch the Europeans closely with EURUSD potentially retesting 1.4843…

The first part of my outlook went mostly according to plan yesterday. EURUSD declined down to the top of the 1.4637-55 range and has rebounded while USDCHF actually pushed up above the 1.0311-23 area… This has left me with a problem in that it would appear that USDCHF may have begun its rally while we haven’t really had confirmation from EURUSD.

It’s touch and go. The other price indicator I was looking at was GBPUSD. Ideally I’d wanted a test of 1.5831 but this fell short at 1.5858 but has risen into the 1.5961-89 range which I felt should hold to complete a triangle. Well, the triangle pattern is quite easy to see and could well hold but the only weakness in this pattern is that the last two legs have been very short.

However, I still think we can use this as a broad indicator for its Euro chums. If it is to now break down then the 1.5985-00 area should really hold. A subsequent breach of yesterday’s low and to be safe the 1.5831 level, would imply a sharp reaction lower and probably below the 1.5769 low. If this happens I suspect EURUSD will follow and USDCHF should move above the 1.0358 high to reach 1.0402 and 1.0452…

Onto USDJPY… This has been frustrating for some while and yesterday saw a brief breach of the 88.23 low but then stalled at 88.00… I feel here we need first view the less extreme scenario that would call for losses to 87.10-40 and preferably the top end of this range. We’re going to have to watch these momentum studies still and ensure that we get a bullish divergence appearing in hourly & 4-hour charts. This is the ideal view. If 87.10 breaks then we could be risking sizeable losses…

AUDUSD still looks supported and USDCAD looks weak… There’s still risk of new extremes here.

Today’s free analysis is for USDJPY 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

Wednesday, October 7, 2009

Stay alert for a possible resumption of Dollar gains if key resistance breaks…

The key break levels gave way yesterday allowing the Dollar to follow-through back lower. After seeing this I was naturally looking for the next resistance levels to hold which broadly they did. This seems all straight forward but not to an Elliottician… For me Elliott Wave is the best tool to judge wave structure, create expectations and understand how the structure tends to develop. However, sometimes it places a huge burden on your head when things don’t quite seem right. Guess what… things don’t seem quite right…

Well, at the moment the corrections being seen in EURUSD and USDCHF are going, it seems, according to the text book (well, my text book anyway.) This suggests that corrections in the type of Dollar decline we have seen should stall in the 1.4637-55 EURUSD and 1.0311-23 USDCHF areas. That’s using normal retracement levels. However, when matched against the structure these depths of retracement seem rather too much compared to the waves that made up the decline.

Now, let me move aside and talk about GBPUSD. The peak at 1.6046 was close to one of my resistance levels but I had reduced its importance because of the breaks seen in its European buddies. Now, GBPUSD looks more like developing in a triangle. This also suggests losses to around 1.5831 followed by a pullback. However, once that pullback is complete the implication – if it then breaks below 1.5831 – is very, very bearish.

Now, this is where I have problems. Of course GBPUSD can move on its own path but at some point it has to return to general correlation with its neighbors. That is the point which I cannot absorb. Once this decline in GBPUSD is over (and looks like 1.5256 now) then it should correct higher strongly. Unless EURUSD & USDCHF are going to continue rallying through to the end of the year (which I don’t see) this disparity is an issue.

Given the comments that structurally a deep retracement is inconsistent I feel we should also be looking at the potential for this Dollar decline to have been corrective only. Given I really feel edgy about USDJPY dropping below 88.60 & 88.23, thus suggesting Dollar strength we’re going to have to tread carefully today.

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 (0 pips).

Good luck.
Ian Copsey

Tuesday, October 6, 2009

The longer the Dollar fails to rally, the greater the chance of one more dip… but wait for breaks…

Yesterday I was amazed at how slowly the market could do nothing... While I don’t believe in a collective market mind it was almost as if the “market” didn’t want to commit to testing the key, pivotal areas that would confirm one way or another whether we’ve seen the Dollar low against the Europeans or whether there’s one further dip to go.

Well, they’re going to have to soon as we can’t remain in the ranges we saw yesterday for too much longer. I feel the way the structure is developing that the longer this takes the balance appears to be tipping in favor of one more new low. It’s not my favored view as the normal projections would have EURUSD failing to reach the next larger target and USDCHF overreaching its target…

Looking at momentum, given the relatively short rally in EURUSD and decline is USDCHF I’m not sure a divergence is relevant as it’s hardly been a trend. Certainly, 4-hour momentum has reached extremes so really we’re going to have to rely on the 1.4694-18 and 1.0268-84 areas I highlighted yesterday… It should mean however, that we should see a solid move today – just go with the break or reversal…

USDJPY joined the malaise and has dipped far enough that it threatens remaining in a sideways range for another day or two. This could see a dip to the 88.77 area but while it holds we should see the range trading continue.

And from this we can derive the impact on the JPY crosses. Overall I see a more bearish day but one more suited to a pullback rather than a resumption of larger losses. Just looking at the crosses doesn’t really help with deciding the Dollar-Currency reactions since it’s not too easy to decide which will lead respective moves. Of all AUDJPY looks weaker but this may be due to a pullback in AUDUSD.

So in summary, I feel that the first half of the day could well see limited moves again and it will either take European trading to break the deadlock or even NY. Until that point take profits when seen and once larger breaks have been established we should attempt to identify suitable entry levels.

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 (-2 pips).

Good luck.
Ian Copsey

Monday, October 5, 2009

Today should decide whether the Dollar will see a new low or begin a larger rally

On the whole I consider Friday reasonably successful. It was a day when the corrections continued, and EURUSD did fail to extend its losses and generate a recovery. Today should be an interesting day. I had a preconceived idea of what I would be expecting to write – that we’d see EURUSD find a high around 1.4672-94 and then it would reverse lower. This would actually fall in line with the scenario that the Dollar has already found its lows against the European currencies.

Well, it may well just do that. However, there is a mixed bag of conflicts all crashing against each other which has been mind bogglingly complicated to work out exactly which way everything will fall. This is generally reflected a lot in the JPY crosses and I feel that keeping an eye on the balance between the possible outcomes is going to be vital today.

First of all, one clear signal for me is the 1.4672-94 resistance in EURUSD. While it holds (and probably 1.0276-82 in USDCHF) we can see the Dollar begin to rally again. This does seem the best solution to those banging conflicts as it would allow USDJPY to continue its rally within the general picture of a stronger Dollar while allowing the JPY crosses to fumble around in a more consolidating mode.

However, a few things to note here is that if there is any short term structure that works better in EURUSD within the rally from 1.4480 it is actually a more bullish one… Aside from that EURJPY looks as if it should stall below 132.20 while AUDJPY has rushed back higher as if it left something behind in the rapid decline from the 79.54 high… GBPJPY – well, I’d prefer a slightly stronger rally to a minor new high – but this would either require GBPUSD to remain in a sideways consolidation while USDJPY rallied or of course vice versa.

I feel I may have confused with the attempted description above but I did say it was complicated… What I am intending to do is start with the EURUSD & USDCHF levels. These are critical and really do imply to strongly opposite scenarios. Break of one side will tell us what’s happening there. For USDJPY we’ll need to watch the 90.00-40 area as it will need to break above here to sustain a more direct and strong bullish rally. Until it it does then we can see a few more days of sideways consolidation. Hopefully if these three can declare their intentions the rest will fall into place.

Today’s free analysis is for EURJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with Friday’s trade set ups (0 pips).

Have a profitable week.
Ian Copsey

Friday, October 2, 2009

More corrective price action expected today

I can’t say I’m too surprised with how things developed yesterday. It was hard to put a finger on things and therefore with the uncertain outcome also difficult to identify support and resistance though still they performed reasonably well.

The second half of yesterday and flowing through into this morning is seeing pressure particularly on the JPY crosses with EURJPY actually reaching a new low and AUDJPY probably having seen the strongest decline after I had suggested the top was in place yesterday.

However, I have to say that I don’t think this is going to be the resumption of the downtrend. I actually see these declines as corrective and while EURJPY has made a new low in the realms of Elliott Wave this can still be part of what is called an expanded flat. Thus, although I feel there is a little more to go at this point (and while EURJPY doesn’t breach 128.93) I actually feel we’ll see a total reversal to new corrective highs for the crosses… Indeed, this does also just look like a correction in USDJPY.

This seems to correlate with what I see in the European currencies. USDCHF has found it hard to move above 1.0448-52 – and 1.0274 should be the most we see if it does break – while EURUSD is displaying great reluctance to push below 1.4500. I feel it will, but the 1.7770-96 area (at the most 1.4446-50) looks firm enough to generate a larger reversal.

Does this mean I think we’re going to see the larger Dollar downtrend resume? I don’t think so. While I can still manage to muddle an argument to say that we should, I feel the entire pattern has got far too complicated for that and therefore, as long at the 1.4700 area caps, I will be looking for the Dollar strength to follow-though next week.

Yesterday’s cap in AUDUSD seems to fit better within this view as does the recovery in USDCAD…

Today’s free analysis is for EURUSD and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (65 pips).

Have a great weekend.
Ian Copsey

Thursday, October 1, 2009

Yesterday’s move in USDCHF throws some confusion into the fire…

Yesterday saw Dollar losses follow-through and mostly looked quite encouraging for the potential new lows but firstly I can’t say that the rally in EURUSD inspired greatly and that sudden whip high in USDCHF was not at all helpful. The 1.0448 high where is stalled does happen to be a harmonic retracement level so at a stretch I could still consider it as the end to the correction and thus imply the 1.0040 target is still possible.

The Asian session has begun with EURUSD underpinned but to really prove itself worthy of extending these gains in line with a test of 1.4843 it must overcome the 1.4672-86 area. Until this point it could still be part of a correction. And while EURUSD attempts to show the way USDCHF follows almost reluctantly and this is concerning me.

So what is the difference between seeing the Dollar continue losses and reversing higher again? Well, this 1.4672-86 area in EURUSD is important and for USCHF I still feel the 1.0276-82 lows are critical. Until that point it will be best to merely observe the moves to watch to see where the confirmation comes…

We can look at GBPUSD also. While I have a sneaky preference for the rally to push up to 1.6169, the 1.6125 level was a valid harmonic retracement as well so I can’t rule out a resumption of the downtrend. I don’t think so at this stage since I feel GBPJPY really needs to make a new high but here there is still risk of consolidation. Perhaps this is a clue to what we may well see over the day – a mixed market which doesn’t seem to want to commit yet to the continuance of the correction but as yet doesn’t quite see the need to buy Dollars either…

Even USDJPY seems to have run out of steam on the upside though I have felt the break above the string of highs around 89.82 as in keeping with a correction higher at the very least but it may not quite be ready to press the case for a stronger rally. However, I do feel the bullish argument is strengthening so retain this thought. Even if it does happen I still think the 90.40-50 area will still provide a barrier – even if temporary.

In summary I think today has a greater chance of being similar to yesterday but maybe a little more volatile.

Today’s free analysis is for AUDJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (90 pips).

Good luck.
Ian Copsey