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HARMONIC ELLIOTT WAVE

Monday, April 26, 2010

The deep pullbacks in EURUSD & USDCHF encourage but should see Dollar gains resume

I’m quite happy with the deep corrections in EURUSD and USDCHF – but rather unsettled that they didn’t drag GBPUSD with them. USDJPY also made stronger gains than expected and in the larger picture this still looks bullish. I’m not convinced all of the 4 majors will perform in the same way from this point with the biggest question mark over GBPUSD for which I have been carrying a bullish view. The overall Dollar strength expected does put this under great scrutiny.

First EURUSD and USDCHF should still see minor follow-through from Friday. However, I don’t expect a dramatic extension and by the end of the day I feel we’ll begin to see the Dollar begin to impose its muscle and begin rallying again. As mentioned on Friday I still see these moving to 1.2806 EURUSD and 1.1021-67 USDCHF over the next 2-3 weeks.

GBPUSD… It shunned the opportunity to prove itself and does raise a lot of question and alternatives. Of the most extreme it could even follow its European compatriots by yielding to Dollar strength and this will imply new lows… I find it exceptionally difficult to imagine EURUSD dropping by 600 points while GBPUSD remains above the 1.5141 corrective low. If there is any chance then today it has to retest the 1.5523 highs to then recycle the correction back to 1.5141-91… We’ll have to keep an eye on this carefully.

USDJPY… Hmmm… It obviously rallied above my target but stalled at an alternative extended projection. I could see a scenario in which it sees a pullback to around the 92.95 before rallying. However, I can’t say that momentum provided any particularly strong reversal signal. I’m therefore open-minded to the next move but if this does rally today also then the next target appears to be at 95.60. Given the JPY crosses have begun the week on a firm note it could encourage USDJPY higher too…

AUDUSD seems range bound but still has some upside to go within this. USDCAD did well by capping at the high end of the 1.0046-66 resistance range – ideally this should see one last leg lower to below 0.9900 before recovering…

Today’s free analysis is for USDCHF and can be found on http://www.fx-forecaster.com/DailyForecast.html along with Friday’s Trader Package Review & Trade Set up report (+100 pips).

Have a profitable week
Ian Copsey

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

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