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HARMONIC ELLIOTT WAVE

Tuesday, June 15, 2010

The Dollar should now correct higher – probably quite deeply – but take care of early shenanigans

Yesterday was pretty good. EURUSD met its target, USDCHF didn’t quite but did bounce from a higher projection. All-in–all this points to a correction higher for the Dollar and I feel this is going to be quite deep due to the slight differences between EURUSD and USDCHF, the latter probably requiring a correction to 1.1600 at least.

Now, before leaping from the starting blocks we have to be aware of some potential complications in the first half of the day. Following this first recovery we are around initial Dollar resistance levels around the 1.2185-05 EURUSD and 1.1440-65 USDCHF areas. This should cause a correction. That bit is fairly simple.

Where we need to pay attention is in EURJPY. This too did very well to reach to the 112.58-96 area and stall but this should not be the end of the rally. I still feel this needs to visit the 114.00-20 area from where it too should see a more substantial correction. Given I am bullish on USDJPY the implication is that EURUSD will drive the cross lower. Therefore, to judge where EURUSD will stall in the anticipated correction higher we shall need to take into account the expected target in the cross. As long as I am right on USDJPY then the top in EURJPY should be generated by the top in EURUSD…

GBPUSD was much, much stronger than expected and I’m a little unsure whether this has found its high. It is possible, but then I do also see the potential for a minor new high before that reverses. Given I’m looking for a deep correction higher in the Dollar we should equally expect the same in GBPUSD and there is some suggestion that we could see a complete recycling of the correction back to 1.4346… That’s a bit of a call and there are some alternatives so we’ll need to be more careful here.

I was disappointed with the performance from USDJPY but I think we can begin to see gains once more. It still looks like a slow grind higher but I do prefer the upside here.

AUDUSD looks to have broken the downtrend for now. There is potential for a new high but we shall be due a correction lower before long. USDCAD bounced perfectly from its support but I don’t think there’s much more on the upside. More likely the risk here is for a sideways consolidation…

Today’s free analysis is for GBPUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+70 pips)

Good luck
Ian Copsey

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

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