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HARMONIC ELLIOTT WAVE

Tuesday, February 2, 2010

For now I feel the Dollar pullback lower can continue but take care…

I closed yesterday’s outlook by suggesting: “Thus, I feel the day could have potential for some early whips, maybe even some minor new Dollar highs, but then settle back into a trading range…” This proved more immediately correct that I had considered. However, we do therefore appear to be in a correction back lower but I’ll take my cue from USDCHF this time which remains with support in the 1.0526-53 area. Ideally this should remain supportive and trigger further Dollar gains.

This should equate to resistance around the 1.3950-81 area EURUSD. I’ll add that there appears to be a trend resistance around current levels in EURUSD but I’m rather wary of this since it doesn’t seem to adhere to the correct requirements to be a valid trend line. Therefore, take care with what you read elsewhere.

I’ll also add at this point that there are some rather loose wave relationships around and this is causing some doubts of exactly what is happening. Therefore it may well be beneficial to look at the JPY crosses. These appear to have found an intermediate low and have some fairly deep corrective targets. This may also imply USDJPY could rally as it failed once again on the downside yesterday and this has upset my basic bearish stance. However, it does seem to have potential to drag the crosses higher if it breaks above the 90.94-98 area. Until then the first move for the crosses appears to be lower.

The underlying message today is that we appear to be in a corrective section of the wave structure and this has the potential added complication of choppy price action. However, this should mean that we’re going to have to try and coordinate the moves in the JPY crosses with the straight Dollar-currency pairs.

I’d even add (and I don’t think I see this happening) that considering EURUSD has not broken below the deepest retracement at 1.3820, USDCHF has not broken above 1.0667 and GBPUSD below 1.5832 that this still does not confirm Dollar gains and leaves a small window of opportunity for a shock reversal lower. It doesn’t look likely but as a caveat it is worth noting…

Today’s free analysis is for USDCHF and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & trade Set up report (+280 pips).

Good luck
Ian Copsey

NEW!! FX-forecaster Trader Package now available at €20.00 pm
For MT4 users

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