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HARMONIC ELLIOTT WAVE

Monday, June 28, 2010

The Dollar has failed to take advantage of the bullish window… care advised…

Friday wasn’t quite the day I had been looking for. There can be little doubt that the market’s preference is to sell on any rally and by far the most vulnerable currency pair has been USDCHF which has lain down and died. I have had to spend a great deal of time furiously tapping on the keyboard looking for the right structure this morning and I have to say it has been tough… As a consequence, while I have attempted to identify the key areas I don’t hold a great deal of confidence in these so please do take care.

What the current position boils down to is whether we’ll see direct follow-through lower or whether we’ll see minor follow-through followed by a moderately deep correction. Looking at 4-hour momentum there is a fairly good chance of seeing some fairly strong bullish divergences so the potential for a deeper pullback after minor losses does seem to hold the stronger hand of cards. The next problem is identifying just where this current move will stall to generate such a pullback…

I shall highlight the areas I feel have the greatest chance, but once again please make sure that you see a good solid trade set up for this. At a minimum the 4-hour divergences must remain intact and preferably generate an hourly bullish divergence. In considering this and the bearish state of hourly momentum right now it would suggest that we’re going to need a pullback before long to generate these hourly divergences.

By tomorrow I hope to have a stronger hold on the next move. However, what I do note is the situation in USDJPY and EURJPY. In the cross any break above Friday’s highs will confirm a double bottom and will therefore be overall bullish (though bearing in mind potential for pullbacks – but not too deep.) However, USDJPY doesn’t look healthy at all right now and I do see potential for a retest of the 88.21 low. I do actually feel that this next decline should generate a correction and we’ll have to see how strong that is. However, what this may imply is that EURUSD will be carrying the weight of the cross on its back and suggest solid gains before long. However, maybe we’ll have to wait until tomorrow before that really takes hold and drags EURJPY higher with it…

AUDUSD has begun the day/week on a strong note and does also have potential for a stronger follow-through higher. However, the old 0.8858 high area may well provide a cap in the meantime. USDCAD… very mixed here. Overall I’m beginning to feel there is potential for a larger consolidation but there is still a window of opportunity for a bearish structure to develop also. I’d steer clear of this until it confirms its intentions…

Today’s free analysis is for EURJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html 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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