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HARMONIC ELLIOTT WAVE

Tuesday, February 9, 2010

Key Dollar supports held and this should follow-through to new highs today

It was a pretty dull day yesterday and in some ways I’m not totally surprised. I had though the correction would have ended a little earlier but the key Dollar supports held in EURUSD and USDCHF which bring more confidence in the view that we have another leg higher to go. However, what has also occurred is a pullback in momentum that has potential to limit the gains and force a second and larger correction.

This is pretty much in line with the wave count I settled on yesterday and I feel therefore limits the larger Dollar rally to probably lower than the frenetic market seems to have in its sights. Just 3-4 months ago the market was screaming for 1.57 and 1.60 EURUSD and now the excitement is for a retest of the 1.2328 low. It does seem a bit too much in such a short space of time and to me begs a checking of emotions and to consider a scenario suggesting continued sideways range trading albeit on a large scale…

If USDJPY’s negative correlation to the moves in Dollar-Europe continue then my call for one further low here before a reversal higher – also in a sideways consolidation – may prove to be correct. I don’t see any change to the USDJPY view and that may hold implications for Dollar-Europe too.

Two other pairs I am looking at with some doubts and a burrowed frown are AUDUSD and AUDJPY. There are pros and cons to this situation but ideally I’d like these to have found their respective lows or perhaps have one minor new low to come. In terms of any correlation to the general Dollar movement and the anticipation that we’ll get a reaction from minor new highs, then there is an argument to be noted. It’s still early days and could swing either way. I can’t say momentum is quite on my side, but there is a nagging doubt in my mind… Watch those two therefore.

I even see a top in USDCAD coming as well. While the market concentrates on EURUSD, at the moment I can’t quite get the same feeling of excessive Dollar gains… but let’s see if my scenario proves itself first…

Today’s free analysis is for AUDJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & trade Set up report (+120 pips).

Good luck
Ian Copsey

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

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