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HARMONIC ELLIOTT WAVE

Monday, July 12, 2010

The correction has finally begun and has potential to be moderately deep

Finally it had to happen, even if it was much later than I had originally anticipated, we have seen the Dollar bounce and this should extend until tomorrow at least and probably into Wednesday but I doubt for much longer. In some ways it probably won’t appear to be too deep but for the retracement it is making it should be deeper than normal. This is also highlighted in USDCHF which, after all, failed to follow-through lower and has maintained its position above the 1.0480 low. I have been pointing out the lack of a decent correction for some time but the momentum which had been carrying this lower finally stalled and perhaps now we can see a decent correction. GBPUSD too has made its reversal.

However, as much as I feel this will continue it has potential to be quite slow and messy. I feel the Dollar can push a little higher first thing today but not by too much and a correction will very soon be seen and this could take up to early NY trading. The benefit should be the ability to look for better buying levels later in the day.

USDJPY didn’t reach its target on Friday but should today. Probably, as long as this rallies at the same time as EURUSD corrects higher we could see EURJPY moving higher also but I’m beginning to doubt whether it has legs to reach the 113.40 high again… Thus, be aware of the risk of an earlier reversal which could be quite sharp if USDJPY & EURUSD both turn lower at the same time. This should be the beginning of the drop back to test the 84.82 low in USDJPY so expect a decent decline once the corrective high is seen.

AUDUSD still looks positive overall but I doubt it’ll reach a new high as a deeper correction is due here also. USDCAD extend losses more directly than I had anticipated so now we have to be aware of a move to the 1.0200 area more directly.

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

Have a profitable week
Ian Copsey

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

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