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HARMONIC ELLIOTT WAVE

Wednesday, May 26, 2010

Do I see a bullish Euro & GBP structure… or am I reading too much into the recovery?

Yesterday’s losses in EURUSD and GBPUSD surprised by their depth but these weren’t enough to break the old lows. It did help USDCHF higher at long last, even breaking above 1.1666 in the process but not by too much and capped just a few points above the next resistance at 1.1691…

It has left me with a headache. Well, trying to make sense out of just price movement can do that at any time, but there are times when the Dollar looks strong against one currency and weak against the other. This situation occurs between USDCHF and the other Europeans… Perhaps that is possible given the moves we have seen recently but wow… that would put the cat amongst the pigeons…

What I feel I have seen are complete corrections lower in EURUSD and GBPUSD… By saying that I should explain that this event would imply new highs above those seen over the past week… I could even go as far as to say that one interpretation would be very, very bullish for them but I’d rather leave that until I see what happens today first…

AUDUSD looks bullish – but here I’d only go as far as suggesting a minor new high between 0.8361-96 and then a second dip to a new low before a decent correction.

Momentum hasn’t really broken down with yesterday’s moves and there’s even an argument for further gains for EUR & GBP. Therefore, I think how I’d like to approach today is to take things step by step, noting the break levels and seeing whether the bullish potential actually holds.

USDJPY has recovered well also and almost looks as it, too, wants to break higher. Equally I’d prefer just to be cautious until the 90.96 area breaks – once it does then we can expect quite a decent follow-through. This tends to match with EURJPY that from the low yesterday does seem to want to retest the old 114.38 high – and maybe just above – but that should be it.

Hence this last clue is one of the issues that make me cautious. If EURJPY is to extend lower and below yesterday’s low following this correction either USDJPY or EURUSD has to drop considerably. Hence, for me the day is one of caution, observation and noting breaks.

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. (+235 pips)

Good luck
Ian Copsey

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

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