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HARMONIC ELLIOTT WAVE

Friday, June 18, 2010

Finally the Dollar resumes its losses… more to come but probably limited today

I was caught out on those deeper pullbacks yesterday and on looking back of course I kicked myself for not considering that alternative. The one I found most strange was USDCHF although GBPUSD was pretty confusing as well. However, it was USDCHF which pushed me into yesterday’s decision and the degree of losses also took me by surprise. It has made rapid progress towards what I had considered to be the final target while EURUSD has comparatively seen quite conservative gains. This is going to need EURUSD to make some pretty rapid gains next week to catch up…

For today we are still “mid-wave” and this should limit any corrections and from what I can see the chances favor Asia doing very little with sideways range trading the likely result. Once this has completed, which should be in early European trading, the move which began yesterday should follow-through. I don’t see this as being a frenetic move but more of a tail-end decline that should generate a moderately deep correction – basically to the move which began yesterday. For any position takes identifying the end of this should provide a decent trade.

This is echoed in GBPUSD which seems to be taking a labored rally from the 1.4346 low and most probably will continue that way. It does still have room on the upside but should lag behind EURUSD as we go into next week. Another echo sounding is in AUDUSD which failed to really match the strength seen in the European currencies. That isn’t too far off a peak – and an intermediate one I think – therefore should correlate quite closely in direction but probably less in the actual size of the move.

USDJPY… I almost breathed a sign of relief that it actually made a sizeable move. I want to say that it should continue lower. Well, it should as momentum is looking pretty darn bad but there’s also the potential for a choppy sideways move, maybe even a small breach on the downside and a recycling of the correction. We have to be prepared as very clearly it’s not a currency pair with any mission at the moment. Let’s just say the downside still looks vulnerable but there could be a trick or two up its sleeve today…

Perhaps the chance of a sideways move is more likely if I consider EURJPY… This has moved into a sideways range but does seem very close to completion. It still has that upside risk I have been banging the drum about so once this consolidation is complete it should rally – but is more likely to be carried on its way by the rally in EURUSD. A massive follow-through is not expected so that rules USDJPY rallying, but also would argue against it declining too…

Finally, the good old Loonie… has gone loonie but seems on track to make a rally today but once this has made minor new highs it is due another push lower. However, I suspect that will come next week.

Today’s free analysis is for EURJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+0 pips)

Have a great weekend
Ian Copsey

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

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