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HARMONIC ELLIOTT WAVE

Thursday, July 8, 2010

I was clearly too hasty in declaring a corrective top in EURUSD… but maybe today…?

I had in mind a short term cycle low in the Dollar yesterday and this prompted the call for a deeper correction. I now face a choice between considering the cycle high was delayed by a day or we actually already seeing the downtrend resume directly. However, what concerns me about the latter is the sheer lack of a deep correction in USDCHF. It’s something I’ve been pointing out for a while and clearly it hasn’t been going my way, but I can’t shake this off.

In USDCHF hourly momentum is still dragging lower with no sign of a bullish divergence but it still exists in the 4-hour chart and the 8 hour chart. These are certainly not to be ignored. In EURUSD the 4-hour bearish divergence remains and there is a threat of an hourly one developing now which didn’t occur at the 1.2661 high. The same can be said for GBPUSD. So the threat still most definitely remains and until we see a break above 1.2710-20 EURUSD, below 1.0434 USDCHF or above 1.5253-83 GBPUSD we still need to exercise care. While I am overall Dollar bearish I still feel that a pullback at this stage is required for the structure I am looking at.

USDJPY seems at last to be making a more emphatic move. Well, emphatic within the 86.96-88.45 range… As long as the current correction can sustain itself to reach the 88.23-45 area I still feel there is risk for a dip again. However, I am quite aware of the situation in EURJPY which does seem to be on its way higher. It shouldn’t be a direct rally with possible stalling points around 111.10-25, 111.85 and 112.44 but while this recovery is possible either USDJPY or EURUSD has to drive this. If EURUSD breaks above 1.2710-20 then the upside is clear. However, if it holds then quite obviously USDJPY has to be sitting in the driving seat. If there is any stronger doubt in my mind then it’s in USDJPY…

AUDUSD has resumed its rally strongly but it’s due some corrections before long. I don’t see them as being particularly deep but I don’t think the rally will be as direct as the past two days. USDCAD has almost certainly broken down and this morning has even broken the 1.0466 swing low. There’s a small bounce to be seen not far lower but overall look for losses now.

Today’s free analysis is for USDCAD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+70 pips)

Good luck
Ian Copsey

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

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