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HARMONIC ELLIOTT WAVE

Wednesday, July 7, 2010

Has EURUSD topped or is there one last gasp higher before the deeper pullback?

In line with my comments yesterday EURUSD followed through towards the 1.2670 corrective high, falling just short. That may be the high I was looking for… or possibly there’s one minor new high to come. If that is seen I do mean minor as I can’t see this moving above 1.2700 and more likely would not break the 1.2670 level by too much… The reason for the caution is more that hourly momentum has not provided a bearish divergence to match the 4-hour divergence…

Now elsewhere I had less success. USDCHF only made a marginal new low at 1.0561 but at an interesting level which I dismissed yesterday. This and at most the 1.0541 support are indications that we may well see a total recycling of the decline from 1.0750 – and potentially see the deeper correction I have been looking for. GBPUSD has done the same and does not look like breaking above 1.5226. While that caps, the risk is similar – a reversal all the way back to the 1.4872 low…

So be aware of this risk, all suggesting quite deep corrections which should last through to Friday at least and maybe into Monday next week. Even if EURUSD doesn’t stretch to a minor new high the Dollar is due a pullback higher.

USDJPY spent the day frantically doing nothing at all, a rabbit caught in a car’s headlights. I still have a preference for a minor new low into the mid 86’s but equally we are due a recovery here also. This is going to impact on EURJPY which failed miserably in its attempt to follow-through higher. I’d say it has risk of returning to 109.14 again but the prospect of consolidation/correction in both EURUSD and USDJPY doesn’t really fill me with great confidence. This is definitely one to avoid for the moment I think.

AUDUSD is mixed. It did rally quite well yesterday but unless it gets above 0.8590 I’m not going to get too enthusiastic about the upside – for now at least. USDCAD disappointed with its decline and is in a similar situation to AUDUSD unless it can break below the 1.0466 corrective low.

Today’s free analysis is for GBPUSD 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)

Good luck
Ian Copsey

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

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