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HARMONIC ELLIOTT WAVE

Friday, May 14, 2010

The decline continued with shallow pullbacks … the risk maybe a recycling back to 1.3086…

The deeper pullback failed and losses resumed directly. This has provoked a new low but one achieved with shallow pullback along the way. I am not too concerned with the new low as it still fit into the larger picture and there’s even risk it could extend below 1.2500. However, while it doesn’t go too far – and 1.2475 would be my limit – then the risk is actually a total reversal and a return to the 1.3086 high. With USDCHF having stalled around the targets I would expect in a triangle the two together do seem to be working in tandem. I’ll even add GBPUSD … there is still downside risk back to the 1.4479 low, maybe minor breach but this too seems to be getting a bit stretched.

All round hourly momentum is not looking totally comfortable with the Dollar rally that we’ve seen and this tends to support the risk I’ve outlined. However, given the general circumstances surrounding yesterday’s move it will be foolish to fight any breaks of key resistances and doubly so if the divergences break – a factor that often actually accelerates the trend. I’ll stick with my cautious call for the recycle, but it’s best to be aware of the risks.

It’s worth noting that weekly Dollar bearish divergences are still intact but not really at a stage that they can’t be broken. It is a warning to heed but there’s little from daily momentum to suggest a massive reversal at this point.

USDJPY… continued its frustrating game of rally & pullback and is really beginning to stretch the imagination. The daily picture still seems more bullish than not but the progress being made is exceptionally reluctant. I still feel the way forward is to buy on dips but the number of twists and turns is more prolific than an Agatha Christie novel… However, as elsewhere I see room for EURJPY to turn itself back higher. The only additional twist that can occur here is that I don’t see this being a robust rally which considering the strength that may be possible if EURUSD recycles doesn’t really point to a firm USDJPY… Still be very careful here.

AUDUSD… very clouded – take care. USDCAD certainly looks as if it has found its low but there’s still a pullback to come before it can truly make upward progress…

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. (+160 pips)

Have a great weekend
Ian Copsey

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

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