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HARMONIC ELLIOTT WAVE

Thursday, May 6, 2010

Dollar bullish momentum is really threatening any possible reversal

The 1.2935 support valiantly held the front line attack for some while yesterday but almost inevitably it finally caved in and allowed the marauding Dollar to extend its inexorable climb... and then some… For a brief few hours the 1.3805 EURUSD low and 1.0086 USDCHF high had me wondering whether we had witness one of those final collapses in a spike low/high (and in Elliott terms a fifth wave extension.) It may still be possible but daily momentum is horribly Dollar bullish still and it’s only the weekly momentum that is clinging on to a Dollar bearish divergence. Having said that, there is some evidence to suggest that a time based reversal is due over the coming 1-2 weeks. However, even that time reversal implies there seems to be more gains to be seen…

I’d love to see a direct reversal now but there are significant mountains to climb and it does seem a remote possibility. However, just in case, keep that possibility in the back of your mind. If I can see any lower targets for EURUSD then there’s one around the 1.2671 area and if that breaks then the 1.2328 low does come to mind.

However, for today there are some short term signals that suggest a pullback but this could find a barrier in the 1.2905-35 EURUSD area and 1.1070-00 USDCHF area. As for GBPUSD – that too seems to require a pullback higher but further lows are possible here too although at this point I don’t think they’re going to be to below the 1.4782-02 lows.

Even USDJPY collapsed and still appears to have further to go. Key support appears to be the 92.74-81 area. This tends to fit in with EURJPY that still has larger downward pressure but while 119.85-95 supports a pullback is due first. Overall this does seem set to break below the 119.64 low.

AUDUSD held the 0.9019 support and likewise due a pullback but I suspect losses will eventually take us below the 0.9001 low – with two target support areas – at 0.8981 and favored at 0.8911. USDCAD may well spend the day consolidating or if it extends higher directly then look for 1.0482.

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 (+155 pips).

Good luck
Ian Copsey

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

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