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HARMONIC ELLIOTT WAVE

Monday, August 2, 2010

Emphasis remains on identifying the Dollar low…

Please note that The Daily Forecaster will be taking its summer break from the 9th-13th August


I can’t say Friday developed exactly as expected but overall progress was made towards the long anticipated Dollar low. The corrections in GBPUSD and EURUSD were slightly deeper than expected but still retain their bullish trends. In particular GBPUSD saw a break of the expanding triangle line I had drawn but then whipped back up to new highs. While it wasn’t on my list of alternatives, now that it has occurred it generates an alternative route which appears to indicate a higher target.

Quite obviously, from this point onwards we have to be aware of the growing risk of a reversal. The issue I see facing us is more the varied progress that needs to be made to reach targets. I can see risk of some early consolidation in GBPUSD and USDJPY but the Continental Europeans appear to require a more direct approach as their respective targets a little more distant. From that perspective I feel we’re going to have to turn off the requirement for correlation to a certain extent today and be prepared for some movement in the crosses.

While it is difficult to judge the timing, and assuming I am right about the direct move to targets, then I would imagine this is going to take the majority of today with some risk of extending into early tomorrow. I only have one concern and that is a potential second deeper correction before the final descent develops. From what I can see this is a more unlikely development but one just to tuck into the back of your minds.

If there is anything I can add to provide a stronger all-round picture it is that early trading in EURJPY does look bullish as a correction back higher does look likely after last week’s initial decline. There is no change to my view that the cross is on a larger decline now, but it does tend to correlate with my impression that USDJPY may well initially lag behind the Continental Europeans…

AUDUSD does look like making gains also but I’m not sure these are going to be extensive. USDCAD does appear to have voted to retest the 1.0138 low…

Today’s free analysis is for USDJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html along with Friday’s Trader Package Review & Trade Set up report. (+50 pips)

Have a profitable week
Ian Copsey

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

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