Wednesday, June 23, 2010

Yesterday’s moves have made me a lot more cautious…

I’m really not quite sure what to make of yesterday… In many ways there hasn’t been any key levels break in the Europeans. In fact, the bounce from 4 pips above the 1.4682 support in GBPUSD looked just about perfect. USDCHF didn’t make new highs but that’s not a problem. EURUSD… well… this one hangs on a thread. This is the pair that has me concerned.

At 1.2251 the low was just above the critical 1.2241 swing low so there’s no break to the higher high - higher low bullish structure. The slight concern I have is in the nature of the decline which has internal ratios that are more in line with an impulsive (trending) structure. However, it is missing a new low so until we get that and the 1.2241 low is broken by more than 10 pips I cannot quite say that things have changed. But boy those ratios are convincing.

Well, that is confusing but there is a clear differentiation that will allow us to recognize what is happening. If this pushes below 1.2241-50 and down to the 1.2190-10 area it will imply a larger correction to the rally so far. It should correct higher first but it will imply another low later. On the other hand, if the 1.2280-90 and then 1.2317 corrective high breaks first then the direct Dollar decline remains valid. If EURUSD makes new lows then GBPUSD will probably trade in a sideways consolidation and USDCHF will manage a deeper pullback higher too.

USDJPY just couldn’t muster up enough enthusiasm to push higher and is once more on the brink of losses. It probably has the same ambiguity of the Europeans and given that its recent history has displayed excessive corrective structures we’ll have to stay alert here too. Overall I remain bearish but we have to overcome the near-term uncertainty.

AUDUSD is much in the same position – could be poised to move in either direction but I have found the downside becoming more probably. USDCAD is moving in line with underlying ideas and does still have potential for a second push higher before the correction ends…

Today’s free analysis is for USDJPY and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+65 pips)

Good luck
Ian Copsey

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

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