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HARMONIC ELLIOTT WAVE

Tuesday, July 6, 2010

It looks like we should get some marginal new Dollar lows but a pullback is due…

The rally above 1.2587 EURUSD has ruled out any recycling in price back to the 1.2150 low and therefore we can consider this to be a bullish structure which still has some way to go… Having made that statement I feel we’re still going to need to exercise some care as I’m not convinced this is going to be a direct rally towards the eventual target.

The day has begun with the Dollar on a firm note. I can see one or two alternatives so we’ll need to observe how the early part of the day develops. My ideal scenario is a bit complicated but will basically involve a pullback into European time followed by a second decline but which should not fall below 1.2470. This would provoke a break back above 1.2610 towards the 1.2670 corrective high. It could stop just below or possibly even just above. However, from that point I would not be surprised to see a long, slow grind lower through to Friday before the next leg higher – to new highs.

The alternative would be a slightly deeper correction now perhaps back to 1.2410-40. If this occurs then I feel the risk will more directly bullish and for the rally to extend strongly above 1.2610 and 1.2670…

These are the scenarios I’ll be watching as a marker to decide how the rest of the week will pan out. Assuming the first alternative in EURUSD occurs then I’d suspect that USDCHF should see gains edge higher into the 1.0715-30 area before dropping more sharply. Equally this should mean GBPUSD should ideally remain above 1.5010-50. If these general guidelines begin to break down – opt for scenario two in EURUSD…

USDJPY … well, it held the 88.23 resistance well but has made a meal out of trying to push lower. It strikes me as a potential situation where we see a longer consolidation that may even see a retest of 88.23… Overall I remain bearish and it’s more about how the move lower will develop. Given that EURJPY, while it remains above 108.60-00, can still push directly higher I suspect that it is going to fend off any strong losses today to allow the cross to remain supported. If not… well, we have to consider what happens in EURUSD again.

AUDUSD has almost retested the 0.8316 low again today and this does seem to be the prominent risk. However, do take care around 0.8268-89. USDCAD has an awfully complicated structure but does seem set to push higher towards the target I have been eying for the past week…

Today’s free analysis is for EURUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with Friday’s Trader Package Review & Trade Set up report. (+80 pips)

Have a profitable week
Ian Copsey

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

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