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HARMONIC ELLIOTT WAVE

Friday, May 21, 2010

The correction has continued but maybe today won’t be quite so direct

Partly good, partly bad and partly frustrating is how I’d explain yesterday I think. Overall however I am encouraged by what has been seen and the prospect of the pullback in EURUSD and GBPUSD remain intact. However, following these first bursts of correction I feel it could now become more complicated as we go into the weekend.

There’s no doubting that the market hisses and spits when anyone mentions the EU and that isn’t going to change particularly quickly, at least not without some new catalyst entering the market. Therefore the risk is for there to be as many bears selling into rallies as there are bulls looking for a deeper correction. GBPUSD faces the prospect of trying to overcome the 1.4518 high and I have my doubts that this will happen today though it may well be approached.

We also have the conflict between EURUSD and USDCHF, the latter remaining stubbornly in its range while EURUSD did all the hard work. The possible upside in USDCHF hasn’t totally gone away but it didn’t do itself any favors yesterday. Maybe this pair will provide the pointer to the next move although even then there is a certain inefficiency in the link at the moment. What this does mean is that care is going to be required. Overall I think these two have potential to be more erratic today if they fail to break key levels.

USDJPY… what a drop… Will it manage to break below 88.21 or will it just shave it? Frankly it does seem to be a critical point as loss of this area would appear to place a lot more bias to the downside. However, I sense that it won’t – at least not yet – as EURJPY seems to have found the low I was looking for earlier in the week, only a little lower that I anticipated. This should now correct higher in a manner which appears to promise erratic itself but I think buying the dips for now to be the way to go.

AUSDUSD… once the safety new of the market – if all else fails buy the Aussie now just doesn’t seem to apply. While I feel a pullback is due I still see lower levels… USDCAD on the other hand performed very well and should continue to extend its gains. The 1.0737-41 area may well hold once again though for a pullback. Overall it still has much higher to go and I feel eventually the 1.1220-30 area is possible – maybe by late next week.

Take it more carefully today…

Today’s free analysis is for USDJPY 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)

Have a great weekend
Ian Copsey

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

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