Thursday, July 15, 2010

The Dollar extends losses but not quite uniformly…

While the Dollar made the expected losses it made hard work of the process, most of the day seeing consolidation before the blip lower. The exceptions were perhaps GBPUSD which made steady headway and USDCHF which failed to move to new lows.

The implication as this process continues towards a more significant high in EURUSD that should provoke a longer moderately deep correction is potentially quite interesting. On the assumption that we do see this move in EURUSD the risk is that USDCHF will make only minor new lows and this would threaten a complete recycling of the correction to 1.0675. Equally, if the move higher in GBPUSD slows the same implication is suggested in terms of a recycling of the correction back to 1.4946.

The Dollar is already beginning to build up possible bullish divergences in the 4-hour chart to support this development and as the process of the current correction lingers over the Asian session we could approach these Dollar support levels by the end of today or perhaps into tomorrow.

USDJPY failed in its second attempt at the 89.14 high and has returned close to the 88.02 low but has corrected higher. There is a potential double top in both USDJPY and EURJPY – patterns worth noting – and as long as the key supports break we could be facing a more sustainable decline. The slight fly in the ointment is EURJPY which should ideally actually make a new high above 113.40 before it declines. However, it is treading a fine line having fallen just short of target and judgment is going to required if the downside breaks prematurely…

The AUDUSD rally is losing a bit of steam which concerns. I still prefer a bullish outlook but with more frequent looking behind me to watch for corrective dangers. USDCAD is doing what it does best in trying to confuse the heck out of the market…

As mentioned yesterday, I view all that’s occurring now as a prelude to a final push higher in the Dollar into the August/September timeframe where I see a confluence of weekly structures coming to an end and which should allow the very bearish Dollar cycles begin the final multi-year push to significant new lows in around 2-3 years.

Today’s free analysis is for USDCHF and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+60 pips)

Good luck
Ian Copsey

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

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