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HARMONIC ELLIOTT WAVE

Thursday, July 22, 2010

The Europeans appear to be converging on targets to see the Dollar resume losses

This has all taken much longer than I would have preferred, but never-the-less from a price perspective the moves seen yesterday are beginning to home in on retracement areas where I feel we’ll be able to look for the next leg lower for the Dollar. Taking a further step back daily momentum is reacting well and allowing for the development of Dollar bullish divergences over the coming week. Thus, the converging of time, price and momentum conditions appear to be positive for the anticipated outcome.

Back to today we have not quite completed the correction but this should be achieved probably in European trading or early North American trading. It suggests a rather slow start to the day, as usual in Asian trading which should allow a pullback to yesterday’s Dollar gains that should eventually turn back to the upside for the attack on the retracement targets. These areas do seem to slot in well for the projection targets for the entire Dollar bearish correction…

Where I have some doubts and confusion is in USDJPY and EURJPY… Ideally I would like USDJPY to make one more attempt higher. It has actually done just enough to satisfy a correction to the decline from 89.14 but one more push would help. However, EURJPY doesn’t seem to fit in with this. When I came to this pair my immediate thought was not just bearish but very, very bearish. Yesterday’s decline appears to have confirmed 113.37 as the final high and therefore we should be seeing the new decline begin.

However, as much as that seems inevitable now the prospect of EURUSD rallying by late today and probably quite quickly and the downside developing in USDJPY which I feel should be more sedate doesn’t add up to significant weakness in the cross. Being EURJPY one of its favorite pastimes is consolidation. I’ll probably use this as a litmus test to judge how things will develop. Let’s just say the vulnerability to losses is now present but let’s wait until it presses its case before reacting.

AUDUSD failed to progress as I had expected and I now see the 0.8730-40 area as important support. I think it will hold early in the day but we’ll need a stronger recovery to avoid a subsequent extension lower. USCDCAD remains whippy with yesterday’s losses much deeper than I had anticipated. However, the late rally appears constructive so while 1.0455-65 supports we should still see gains…

Today’s free analysis is for EURUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+110 pips)

Good luck
Ian Copsey

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

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