Friday, August 6, 2010

I still think the evidence supports Dollar gains but tinged with some uncertainty

Please note that The Daily Forecaster will next be published on the 16th August

Since this will be the last update until the 16th August I shall attempt to provide general guidance in where I see the major risks. Very clearly I didn’t really get my way yesterday, the Dollar recovery stalling and providing a degree of near-term uncertainty. With the non farm payrolls being announced in early NY trading it seems quite probable that this will remain the status quo until then.

When I wrote the daily review for the trader package that considers the implications from indicators it was just about universally neutral. Daily (Dollar) bullish divergences remain in 3 of the 4 majors with just the exception of GBPUSD but this could be considered to be a possible spike high. The intraday momentum signals have extinguished themselves and thus await a new thrust.

When I came to the process of wave measurement and structure I could see a certain level of ambiguity but overall slightly more evidence of a Dollar bullish structure. This does still remain my preference and assuming tonight and next week generates further gains I feel this should see a moderately solid follow-through but we’re still at a stage where even after the next rally there will be risk of a pullback and one that could conceivably be quite deep. So unless there is some catalyst to limit the correction and spark a round of gains we shall still have to play a cautious game for the coming few days. It may take until the end of next week to see a stronger directional rally.

Now, to cover the alternative… If 1.3300 EURUSD, 1.0140-1.0255 USDCHF, 1.5967 & 1.6013 GBPUSD and 84.65 USDJPY all break… to be honest it will look to me as if we are already entering the final major cyclic decline which will end in H2 2012 (approx.) To be honest, at this stage, it is going to be difficult to provide much structure to work with as there appears to be a good deal of imbalance to the individual structures of the 4 majors. (This is one reason I still favor the downside.)

I guess the 79.70 low is an easy target to identify with the 0.9644 low in USDCHF and 1.7041 high in GBPUSD all coming to mind. However, we’re a long way away from the 1.5143 high in EURUSD. There is the 1.3691 corrective high and probably that would be the first to observe. Above that high there isn’t too much to really provide a focus.

For the moment, until proven wrong, I’ll stick with the view that the Dollar still has more chance of strength…

Today’s free analysis is for AUDUSD and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+60 pips)

Good luck for the coming week…
Ian Copsey

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

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