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HARMONIC ELLIOTT WAVE

Tuesday, March 16, 2010

While the Dollar has pulled back much deeper than expected, I still feel there is risk of one more drop…

I turned on my monitor this morning and looked at the charts… Cue jaw dropping…

Needless to say that this was a scenario that I just wasn’t looking for. Regrouping my thoughts and approach maybe this is a slightly better all round scenario. There had been a mild mismatch between USDCHF and EURUSD in terms of not only extent of points-to-target but also wave structure. The latter is not necessarily too critical as both have corrective structures but this pullback appears to be aligning them from the structure perspective.

It looks as if we should get a mild extension of the pullback over the first half of the day but while these next Dollar highs hold I think we’ll get another push lower. The points-to-target still has a wide gulf but yesterday displayed the tendency for EURUSD to move more sharply than USDCHF so perhaps this will be ok. We’ll still have to watch two areas for EURUSD but USDCHF seems to have a fairly well defined target.

GBPUSD is in much the same position in terms of expected modest losses in the first half of the day and I’m a bit cautious in case we just see the downtrend just resume, but I feel the scenario calling for another high does make the chart look a bit more balanced.

We’ll need to match these with USDJPY and the JPY crosses. I can’t see any strong topping signals in the crosses and while there is some degree of uncertainty coming from the failure for USDJPY to make stronger headway higher, I feel the crosses are still due another push higher. It’s a bit of a mixed bag so I suggest holding off and confirming a few levels that I’ll list in the individual analyses, but as long as USDJPY doesn’t collapse we should see a recovery soon.

So, there’s no overall change to my expectations that the Dollar will resume the underlying uptrend – it’s more a matter of “when” and no “if” so this must be kept in mind. Considering the overall structure I’ll go for a deeper pullback still but best keep an eye out over your shoulder…

Today’s free analysis is for GBPUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & trade Set up report (+10 pips).

Good luck
Ian Copsey

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

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