Tuesday, July 13, 2010

This correction appears to have potential to be quite choppy…

The correction has progressed and interestingly more aggressively in USDCHF which had seen the stronger losses. It has certainly not finished yet but the manner of the decline in EURUSD is beginning to suggest a wide swinging 3-leg move lower. Here the 1.2480 low is likely to be approached today. It may be tested but more likely fall slightly short and from here a fairly deep correction possible.

What will be interesting here is how USDCHF reacts. There are a couple of scenarios I am looking at here but both probably require a little more on the upside, one would imply quite a deep retracement higher. The key issue here is how USDCHF will react while EURUSD sees a deeper correction higher. Ideally, USDCHF should subside into a messy sideways to lower correction. Following this it will be easier to plan the next move.

The third European, GBPUSD, had its own agenda with its sharp drop. Now, this looks to have completed a full corrective structure. That doesn’t rule out additional ones but it does imply a correction higher today along with the other two. I’d prefer to hold my distance from this until it reveals its corrective intentions… or otherwise…

Onto USDJPY the 89.20 resistance was only 6 pips above yesterday’s high. There is a good argument for this to have marked the full corrective high. However, I don’t see any downward move being direct at this point and could cause quite a deep correction. It does beg some attention and care. This is amplified by EURJPY. It didn’t manage to move above the 112.66 high but the move lower does appear more corrective and this tends to slot in with the expectation of both EURUSD and USDJPY seeing corrections higher. However, whether this reaches the 113.40 high again does still seem doubtful to me but a closer attempt would satisfy a retest.

AUDUSD has moved sideways and is likely to remain in a range today. However, I do feel that once this is complete (probably by the end of today) the correction should extend lower as described yesterday. USDCAD is holding its cards close to its chest. I am still basically bearish but feel just a little concerned about yesterday’s correction. Ideally, if I’d want to do anything here I’d prefer to wait for a move to around 1.0201 or a break higher…

Today’s free analysis is for USDJPY and can be found on along with yesterday’s Trader Package Review & Trade Set up report.

Good luck
Ian Copsey

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

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