Thursday, May 13, 2010

The final outcome will depend on today’s developments

Yesterday was a partially successful day only. The Dollar did make some gains but nothing significant and the continued lack of a deep correction kept the bias towards a larger consolidation. However, the structure has become more complicated and I am seeing potential for the alternative more direct decline. It’s doubly complicated by the sheer lack of interest shown by USDCHF.

However, I am beginning to see potential for what may be a stronger push lower later today if we see any moderate pullback in the Dollar over Asian and European trading. This scenario would call for a retest of the 1.2530 EURUSD low – probably a breach by 20-30 pips - but then a pullback higher. If we get this type of development then once the pullback higher is complete the risk will be for a break down to new lows. If we see any other movement lacking in direction we could begin to see some stronger movement higher (in EURUSD) that would either mean a much longer sideways consolidation and well, maybe even a total reversal of the Dollar’s fortunes.

Further Dollar strength does seem to be implied by GBPUSD and therefore I am being pulled more in that direction. The situation in USDCHF is just less clear. If anything we could be seeing an ascending triangle develop or merely a sideways channel. Thus, this interim period may well help us determine the final outcome.

Now, one thing I have noticed this morning is that EURJPY seems to need a rally now. I don’t see this moving to new highs but certainly 300-350 pips from yesterday’s 116.55 low does seem possible if it can push above the 118.40 peak seen already… This does seem supported by USDJPY at least. It may have slowed to a pace befitting a pensioner with an age of 93 but while the 92.77 area can support that pensioner may just get past 94 before he takes a rest again.

AUDUSD appears locked in a short term sideways range – a triangle I think it will be – so look for breaks of range for the next move. Finally, USDCAD spent the day meandering but going nowhere. It is poised to break higher again I think and it’s more a matter of whether it sees one more dip or forces a more direct rally. The 1.2226-45 area seems the critical pivotal area.

Today’s free analysis is for USDJPY and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+75 pips)

Good luck
Ian Copsey

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

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