Sunday, February 21, 2010

Momentum conditions do not favor Dollar gains…

All looked well for the Dollar uptrend on the face of things during the first half of Friday but the strong pullback seen by the end of the day does raise a lot of questions over its ability to force itself back to the morning’s highs. The immediate uptrend has no entirely been broken but it won’t take too much more to confirm a deeper correction lower.

Right now in EURUSD and USDCHF there are quite firm Dollar bearish divergences not only in the daily charts but also the 4-hour and hourly… The key to confirm these divergences will be breach of Thursday’s corrective lows. I do feel that this decision will likely be put off until later in the day and Asia will tend to hold off from making that decision, possibly Europe too, but unless there is a significant recovery the weight of argument does seem to now be on the Dollar’s downside.

I do not think this is the end of the major uptrend but merely another correction within the entire picture. In fact, assuming that the 1.3838 EURUSD high and 1.0608 USDCHF low remain intact it does seem to imply a much more bullish target than I have been looking for – towards 1.2960 EURUSD and 1.1190 USDCHF.

USDJPY almost made it to my 92.25 target but stalled a bit short. I’m finding it hard to fit that into the structure I was considering but the interesting conclusion I feel is more likely is that while a pullback lower is probable the outcome may well be a move to higher that 92.25, potentially to 92.64-94 over the course of this week.

This could keep the movement in the JPY crosses restricted, possibly a little higher first but then pullback into ranges. I wouldn’t be too surprised to see some of their characteristic erratic consolidation tendencies arise again. The one I have more doubt about is GBPJPY as I’m not quite so sure that GBPUSD quite correlates with EURUSD and here I see potential for another new low before it can recover – thus this needs more care.

Thus, overall for the day I suggest observing the initial trading and looking for breaks…

Today’s free analysis is for USDCAD and can be found on along with Friday’s Trader Package Review & trade Set up report (+70 pips).

Have a profitable week
Ian Copsey

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

No comments:

Post a Comment