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HARMONIC ELLIOTT WAVE

Wednesday, June 16, 2010

A definite case of the shenanigans…

It all started off quite straightforward yesterday. There was a little bit of to & fro but then Europe came in and the shenanigans hit in a different way to what I had in mind. GBPUSD rallied from just below the 1.4685-03 support area and towards the sort of resistance area I had outlined. However, I didn’t expect EURUSD to follow, or USDCHF…

Now the next bit gets a bit more complicated. The highs in GBPUSD and EURUSD seem to have good ratios to suggest they were still part of the correction. This will mean that the correction should recycle back to around yesterday’s lows. The 1.1292 USDCHF low was close enough to an extended decline from 1.1672. However, if that is the case then we should be expecting a much deeper correction. If we see a deeper correction in USDCHF then the GBPUSD & EURUSD structures break down…

I can only come to the conclusion that yesterday’s high in USDCHF was the end of the pullback – around 33% from the 1.1730 high. This will mean that while GBPUSD and EURUSD should return to yesterday’s lows USDCHF cannot.

Next problem: EURUSD does seem to have risk of quite a move up to the low 1.30’s, another 700-800 points maybe. USDCHF only appears to have potential down to just below 1.1000 … thus just another 300 points…

Next problem: EURJPY only appears to have potential to 114.13 – for the moment anyway. If EURUSD is to go to the low 1.30’s then USDJPY will need to crash… which even if it does I feel it will be limited. In fact, when I looked at yesterday’s decline it actually looked corrective and thus the next move bullish.

Well, something’s gotta give somewhere… Maybe my EURUSD target is too high. Maybe EURJPY will see just a small correction from 114.13 and then extend further higher. (I prefer this outlook.)

Therefore we have to be aware of the different possibilities and understand where a scenario breaks down. I’ll remain with a directly EURUSD bullish view once this pullback ends and then judge from that point. However, note that momentum is fairly Dollar bearish so follow-through at some point, whether this be after a pullback or direct, does look the more vulnerable side.

Even AUDUSD is beginning to look pretty bullish too. There should be a pullback from around 0.8740-60 but after that extend further.

Today’s free analysis is for USDCAD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+40 pips)

Take care & good luck
Ian Copsey

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

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