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HARMONIC ELLIOTT WAVE

Friday, July 2, 2010

Has the Euro resumed its underlying rally or will the correction recycle?

With Monday being July 4th holiday in the States the next report will be on Tuesday


The start of the day worked perfectly on many fronts but it seems I was looking for a more complicated scenario. The Dollar follow-through lower was pretty aggressive and the temptation is to assume the underlying Dollar decline has resumed. Well, I can’t totally rule it out but I think we’re going to have to be cautious until key levels are breached. Until that point the whole correction can recycle all the way back to 1.2121-50…

In many ways there is a good argument to suggest it will. USDCHF resumed its losses equally aggressively and I’m even contemplating a test closer to the 0.9909 low. However, the missing link remains – the elusive deep correction. In the vast majority of trending waves (as opposed to aggressive corrections) will have a correction of at least 50% of one the directional waves. We haven’t seen that yet… It is in desperate need of this and I’ve been surprised at how far this particular move has extended. The advent of the EURUSD correction recycling and a deep pullback in USDCHF do tend to dovetail but here we have to identify where this may occur. Well, I have my thoughts and will highlight the higher risk levels. Remember also that this is a long weekend and could well have an impact.

USDJPY has forced it way lower and is also in need of a deeper correction. There is a little more to go on the downside but watch out pretty soon. The combined potential for both EURUSD and USDJPY to see corrections is going to complicate the EURJPY cross. I am quite mixed in terms of whether we see it recover or make a new low before a recovery but possibly within an overall bearish structure. USDJPY does eventually look like reaching the 84.82 low but it will not be direct. Thus some caution is required for EURJPY.

For AUDUSD I feel the current levels around 0.8491-06 are important to determine whether it continues its rally or sees the downtrend resume. For USDCAD the low seen over the past few minutes at 1.0566 also appears to be important. Breach would deepen the correction but overall I do feel we should be seeing a new high…

Today’s free analysis is for USDJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+35 pips)

Have a great long weekend
Ian Copsey

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

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