Wednesday, March 17, 2010

It seems that maybe we have come to a crunch time…

On the face of things yesterday worked out reasonably well. However, I’m not quite so sure. There are many occasions when I make a call and the move occurs but then falls apart. I pointed out yesterday a divergence in the reactions between EURUSD and USDCHF. The Swissie didn’t pullback as much as I’d expected but has moved down into the target support range. In comparison the Euro hasn’t recovered above its 1.3795 high.

Taking one step back, the 1.0514-39 area was as low as I could accept if the Dollar uptrend could resume. The high at 1.3795 in the Euro doesn’t have hold a strong impact. However, if the 1.0498 area USDCHF breaks the trend would appear to have reversed and we have to assume that the basic correlation between the Euro and Swissie will continue.

Take a few more steps back… I am very bearish for the Dollar for the next 2-3 years. The monthly cycles are really not in favor of the Dollar. Therefore I have always considered this strength in the Dollar to be corrective only. I had therefore been looking for a large daily sideways consolidation. However, this would imply consolidation probably through to next year. That really doesn’t give much time for the (very) bearish cycles to wreak their havoc.

From today I have begun to observe the alternative and in many ways it is what I would prefer to see because of the monthly cycles. I don’t think we’re going to get substantial follow-through lower today with the 1.0498 USDCHF and 1.3816 EURUSD areas appearing to provide resistance. Thus the result could be a rather range trading day following these tests. Beyond that we should be aware of the risks…

USDJPY is playing around – and the lack of follow-through higher is also concerning me. If this breaks down now it would appear to have a stronger bearish outlook too… I feel today may revert to range trading.

So the message is… take care… not all is straight forward right now but be aware of the risks of moves through 1.3820, 1.0465-98 and below 89.95 USDJPY…

Today’s free analysis is for AUDUSD and can be found on along with yesterday’s Trader Package Review & trade Set up report (+55 pips).

Good luck
Ian Copsey

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

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