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HARMONIC ELLIOTT WAVE

Wednesday, May 12, 2010

Yesterday’s moves are more in line with a larger sideways consolidation

Yesterday did see the Dollar make further headway against the continental Europeans and today I see just a bit more. The bigger question was whether these Dollar gains would imply a consolidation or a direct resumption of the larger rally. The biggest clue for me was the sheer lack of retracements of any size in EURUSD. This type of move tends to point to a corrective structure rather than a directional one. Equally USDCHF has continued to develop in tight erratic moves more attuned to a triangle that a directional move.

Therefore today should see the Dollar’s gains edge higher but stall around the 1.2530-50 area in EURUSD and 1.1179-09 USDCHF. The reaction higher in the former should be quite direct while USDCHF should continue to see tighter individual moves within the larger sideways consolidation.

Now, GBPUSD broke the mould here but this is in a slightly different structure. I can’t see that we’ve seen any larger reversal signal to the daily decline and thus it remains bearish overall. However, this looks like seeing its pullback higher become deeper before the downtrend can continue. What we probably need to do with this one is keep an eye on its continental brethren and work within that structure.

Next USDJPY… I’m just getting slightly frustrated with this one. I have held a more bullish outlook and I’m a bit reluctant to let that go right now but the lack of impetus on the upside has been a bit frustrating. Mix in with that the complication of EURJPY and I find it tough to get too bullish as well. However, quite what the structure basic is has become clouded. A sudden rush up in USDJPY and EURUSD would break the 122.28-48 resistance I have. Never say never – but until that breaks I feel there is more risk of consolidation… If that’s the case and we’re going to see EURUSD back at Monday’s highs then it’ll mean USDJPY will have to go lower.

Thus, just take care with this triangle relationship… something’s got to give somewhere soon…

AUDUSD… has come lower but not emphatically. I remain overall bearish but am a bit frustrated with the lack of follow-through lower. Early losses may be restricted to 0.8895-05 but as long as the pullback is not too deep I’ll prefer to remain bearish. USDCAD… probably one more dip before that begins to reverse higher I feel…

Today’s free analysis is for EURUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+130 pips)

Good luck
Ian Copsey

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

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