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HARMONIC ELLIOTT WAVE

Monday, July 19, 2010

I have some uncertainties but feel that we are due a stronger correction

Friday basically produced moves close to expectations but with some complications. EURUSD overshot my target, USDCHF failed to reach its target while GBPUSD spent the day correcting lower. I find the larger wave relationships for the extremes so far not really in line with normal projection ratios and this raises the uncertainties.

However, the depth of the correction in GBPUSD suggests that we have found a temporary high at 1.5470 and that needs to continue the correction now even if a pullback is initially possible. I am also anticipating a fairly deep correction in EURUSD which raises additional uncertainties as I can’t see these being reflected in the other two Europeans as they have already begun their respective corrections. Therefore, the moves in EURUSD need to outstrip the other two. In particular USDCHF doesn’t appear to have much elbow room to do very much at all…

Therefore I’d like to approach the start of the week with care but considering the risk appears to be for a final end to this larger bearish correction in the Dollar by the beginning of next week there also doesn’t appear to be much room for any pause in the correction. It does really need to get done with it by tomorrow or Wednesday…

USDJPY has extended losses as expected and should see marginal follow-through in the first half of the day but a correction is due here also. I remain targeting the 84.82 low again but it shouldn’t be direct and ideally the Dollar lows should coincide across the 4-majors. This tends to place the risk in EURJPY to be erratically lower. I’d like to call for an end to the correction at the 113.37 high but until the 110.67 swing low breaks there does still remain some uncertainty. The potential is for some rather messy trading this week until EURUSD finally finds its peak next week.

AUDUSD continues its correction lower but it is challenging some key support levels around 0.8617-23 which could change the complexion of the larger wave structure. I’d prefer to see how this develops, especially considering the one week outlook for the Dollar to reverse higher… USDCAD has also become disillusioned with the downside and further strength is therefore implied and I would be too surprised to start looking for the 1.0851 high again…

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

Have a profitable week
Ian Copsey

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

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