Monday, May 3, 2010

The Dollar has reached critical supports … it should rally to targets … or completely collapse

In the end the Dollar didn’t go my way but as warned, the losses weren’t that strong either and even on open today following the Greek bailout package the follow-through was exceptionally mild and only reached the sort of support levels indicated on Friday.

So… will it rally again… or won’t it? Well, all I can say is that while this morning’s corrective lows hold the Dollar bullish structure remains in place and the structure so far from the 1.3691 EURUSD high and 1.0501 USDCHF low have been pretty close to expectations and therefore I’ll stick with it. For me the question is more whether it rallies to targets directly or whether it develops in a more complicated way. Frankly either way the Dollar should rally today and we’re just going to have to assess the manner of the rally to get an idea of which alternative it will take…

USDJPY also looks to be in the same boat. That didn’t quite develop as expected with the pullback from the 94.57 high but while it remains above this morning’s 93.84 low I remain cautiously bullish but if that is the case the rally should be quite firm as I feel too that this is a last rally in the part of the upward structure which maybe has potential to edge above 97.00…

That should keep EURJPY under a more consolidative influence but with the possibility that one may lead the other – and if that’s USDJPY then there could still be some ticks higher first. Bear in mind though that Japan has public holidays for the first 3 days of this week…

GBPUSD… I’m more confident that we’re in a sideways consolidation and don’t think we’re going to see a break of the 1.5125 low of 1.5523 high just yet. However, whether it goes up-and-down or-down-and-up is less clear. Given the Euro is expected to decline I think maybe the downside is more likely but should ideally lag the Euro.

Finally… AUDUSD… the 0.9218-20 lows this morning provide the critical support. While it holds we can still see gains else expect this to follow the Euro also. USDCAD may well make marginal new highs but I don’t expect any runaway gains.

Today’s free analysis is for USDJPY and can be found on along with Friday’s Trader Package Review & Trade Set up report (+50 pips).

Have a profitable week
Ian Copsey

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

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