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HARMONIC ELLIOTT WAVE

Monday, May 24, 2010

This week looks to emulate last week, perhaps with the exception of USDJPY

I can’t say Friday surprised too much. The reluctance to buy European currencies versus the Dollar remains but at this point the Dollar is mostly on the back foot although without any solid follow-through. Indeed, I feel the start of the week could see the Euro under pressure again but probably on through today and possibly a little tomorrow. It seems more like a situation where neither Euro Bulls nor bears really have any commitment and awaiting a catalyst that will provide the next directional move.

Overall I still see more potential for the European currencies to recover over the rest of the week and we’ll have to observe how this progresses to judge whether the structure is constructive. In the larger picture I can see arguments for both sides of the coin right now, some early evidence of a larger reversal (or correction) but until this develops with sufficient robustness the need to keep an eye out over one’s shoulder is still a definite requirement.

In particular GBPUSD has a structure that could slot into a correction or a stronger upward move. How this develops over today and tomorrow is going to be important.

USDJPY… staved off any further losses on Friday but is not yet out of the woods. I do still see upside progress in EURJPY although only in a correction. The eventual target still seems to be closer to 100-105 to me and therefore the question is whether EURUSD or USDJPY leads that charge lower – or both of course. That’s still a day or two away but until 90.62-96 USDJPY is overcome the downside is still a significant risk.

I still feel the Aussie has one more dip to go in the part of the downtrend but then a more sustainable pullback. This tends to fit in quite well with the picture in the Europeans. USDCAD – just a bit concerned there as the pullback from Friday’s high has been a bit deep for my liking. So much so that if it pushes much more there is one scenario that would call for a recycling of the correction all the way back to 1.0110 again…

Today I feel is about the market consolidating its outlook to the Europeans, probably mostly Dollar bullish but stay alert for some individual performances but I doubt with any vigor.

Today’s free analysis is for USDCHF and can be found on http://www.fx-forecaster.com/DailyForecast.html along with Friday’s Trader Package Review & Trade Set up report. (+95 pips)

Have a profitable week
Ian Copsey

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

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