Tuesday, March 9, 2010

So far, so good … but we need just a little more Dollar strength to confirm trend resumption

I knew identifying those Dollar lows would be a tough task… However, they came and we’ve seen constructive gains albeit fairly contained and without setting the market on fire. It may just take a little longer too but all being well, by the end of the day I feel we’ll see upward progress. The key now to a more positive outcome are yesterday’s Dollar corrective lows and of course last weeks’.

There is still a risk of a minor new high in early trading but then a pullback and that will be the one to watch. Assuming I’m correct and this is just a correction the next rally will be stronger and should break through the 1.3533 EURUSD low and the 1.0807 USDCHF high to reach the Dollar highs so far.

Now, in GBPUSD I am a little mixed. It didn’t quite reach my target but this morning has broken below the 1.4997 low. It tends to argue against a move to 1.5206-32 and thus the major risk is lower. Thus we need to navigate the risk of any correction but if anything it looks pretty bearish again.

USDJPY had a quiet day after last week’s rampant rush higher. I still have a more bullish preference but the problem I face here is sharp moves which hide the underlying structure and thus make it tough to identify projections and retracements. I’m not in favor of a move below 89.75 but I’m also not in favor of a direct rush back to the 92.14 high. The type of move I am expecting is a third push higher, probably to around 90.92 and then a deep pullback before a final attempt back at that corrective high. If we see this below 89.75 I’ll get a bit edgy…

This clearly will have impact on the crosses which I still feel may have room for one more push higher so we have a balance between how fast the Dollar rallies versus the Europeans and also against the Yen. It does tend to smack of typical cross-rate volatility so take care.

However, the underlying message is still Dollar bullish still and will only change if last week’s lows are broken.

Today’s free analysis is for AUDUSD and can be found on along with yesterday’s Trader Package Review & trade Set up report (+165 pips).

Good luck
Ian Copsey

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

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