Tuesday, August 24, 2010

The Dollar is tipping over the edge

Well, I think we have our answer… USDCHF has risen above 1.0402 and while there is a grey small area which would allow a deep retracement the breakdown of Dollar bearish divergences in EURUSD and GBPUSD is rather ominous. In that case I have to assume that we’re already on the way higher for the Dollar. Even the situation in EURJPY makes it very evident that a solid decline is underway and overall I feel the momentum of the move will likely accelerate.

I am rather disappointed that USDCHF didn’t reach my favored target, but it has done enough – just – on the downside to fulfill a weekly target and as long as we get over the next 20 points or so this should now begin a rally for the coming 2 months or so… Therefore I feel we should be looking to buy into Dollar retracements in order to take advantage of what should be some solid moves now. Of course some pullbacks will be slightly deeper and I’ll attempt to identify these in the individual analyses.

USDJPY remains stubbornly locked in its tight range, the market seemingly polarized between a break of 84.72 and 86.37. Even if it does break lower, I’m really not that sure it’ll extend too far. This still has a strong bullish divergence and while they can break I don’t think this is the time. Therefore, even if this does move lower I feel the general Dollar bullishness will drag it back higher. To me the stronger structure should take it directly higher but at this point there’s no sense in taking a wager when short term momentum is so subdued.

AUDUSD still looks bearish and does look very vulnerable to a stronger decline, much in line with the general US Dollar outlook. USDCAD still seems to have a little more to go on the upside but with the hint of a bearish divergence forming in the 4-hour chart there is reason to take care and possibly look for a peak if the rally remains slow.

Today’s free analysis is for AUDUSD and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+40 pips)

Good luck.
Ian Copsey

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

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