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HARMONIC ELLIOTT WAVE

Tuesday, May 25, 2010

Correction almost complete so the Dollar should extend its losses

Overall the expectation for the Dollar to correct some of its losses developed quite well with the follow-through higher in USDCHF developing at a slower pace than EURUSD losses. At this point I don’t see any substantial follow-through though there does appear to be need for one more push on the Dollar’s upside before the larger losses develop.

Probably the most telling move of the day was in GBPUSD. That began to go my way but failed to make sufficient headway before the Dollar began to push higher. This caused a much deeper pullback than I would have liked. However, I do feel it’s a correction and not resumption of the Dollar’s uptrend but the depth of the pullback here is deep enough to suggest that the weight of argument is for these Dollar losses to be corrective only.

This will imply that before the end of today we should begin to see the Dollar losing ground once again. There does seem to be room for extending its gains over the first half of the day but only marginally and I feel this is where we should be concentrating to identify just where this will end.

USDJPY reached the low end of the critical 90.62-96 resistance and the market now faces a pivotal decision in whether the decline will break below the 88.13-21 lows or resistance the temptation in favor of further daily gains. It has set itself up to generate some decent bullish divergences so the question is more whether the market has the determination to cause a stronger follow-through… It’ll be a tight call I feel but my preference for the upside to become stronger. However, I’ll wait for confirmation.

This seems to be reflected in EURJPY – a similar decision to be made if this is going to attack the 109.46 low. I think the deciding factor here will be EURUSD rather than USDJPY…

AUDUSD failed to break above the 0.8361-96resistance and until that breaks the risk is still lower. USDCAD edged to a new low but I fancy this should resume its uptrend now…

Today’s free analysis is for EURUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+70 pips)

Good luck
Ian Copsey

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

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