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HARMONIC ELLIOTT WAVE

Friday, August 20, 2010

The end of this correction is in sight but may well spring a few surprises on the way…

Yesterday was a messy, messy day but one move stood out above all others – the drop to 1.0257 USDCHF. The disappointment was that it retraced a little deeper than expected before the drop. However, what it does do is provide an excellent marker for what happens next…

In general across the Europeans I anticipate an erratic start to the day. In particular in EURUSD and GBPUSD there seems to be prospect for some range trading which should allow USDCHF to retrace a little higher to complete its correction from the 1.0257 low. This should then be followed by some Dollar weakness across the Europeans to deepen the overall correction to the moves from the Dollar lows.

The key for where they will stall has a strong chance of being identified by the anticipated low I have been highlighting for some while. I will highlight the sort of areas we may expect in EURUSD and GBPUSD within the individual analyses.

Be sure to spot this as I suspect this will be the lowest we see the Dollar for around a couple of months. EURUSD is destined for new lows while GBPUSD and USDCHF should not break their (Dollar) highs seen this year…

Now, the more troublesome currency pair is USDJPY… The 85.90-98 resistance was highlighted yesterday as part of a bullish structure but the correction bit too deep to drop to just above the 84.72 low. What next? My preference is for it to rally. The reasoning comes from EURJPY.

I am bearish overall on the cross and this should flirt with the 100 area – maybe just below. However, that is my limit for now. Considering I am looking for a new low below 1.1879 EURUSD it should imply that USDJPY will recover. The structure I am looking in the weekly chart appears to be a descending triangle and ideally it should not significantly break the 84.82 low. The 84.72 level was perfect and my preference is for it to hold. In the short term EURJPY doesn’t appear to be declining in a trending mode and I still have a preference for a recycling back to the 111.10-27 area. I shall highlight the EURJPY supports in the report.

Well, it’s a tight call… best take care still…

AUDUSD is making constructive bearish structures but still has potential for some short term whips. USDCAD bounced almost perfectly but appears close to an initial peak so expect a pullback.

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. (+265 pips)

Have a great weekend.
Ian Copsey

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

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