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HARMONIC ELLIOTT WAVE

Tuesday, August 31, 2010

It looks like the correction is going to take longer than expected…

Yesterday’s initial pullback approached the support areas that should hold while the Dollar can continue its correction lower but took just about all day in doing so. That takes the wind out of the sales somewhat when looking for a swift resumption of the current Dollar uptrend. It was even complicated by EURUSD and USDCHF both dropping at the same time – a factor that makes it tough to know when the European pair will move in a correlated manner…

However, more than any other the perfect peak at the 1.0308 resistance I pointed out yesterday is encouraging and barring any morphing into a complex correction (which I heavily doubt) this does look like making its way lower to target. Indeed, this looks as if it could reach target by late today or at the latest tomorrow and may well be an indication for the EURUSD and GBPUSD corrective peaks to be seen. With the recent lack of correlation that has a large caveat however…

So I feel that the Dollar should probably basically spend the day making gains against the Europeans and we’ll have to see how strong this develops. The currency pair with the more definable structure is USDCHF though…

USDJPY… ouch… Just a minor breach of 85.81 and solid reversal lower. I have to lick my wounds there somewhat and from the look of EURJPY which failed just below the ideal 109.82 resistance the downside remains the larger risk. Given the more bullish outlook in EURJPY that does tend to highlight weakness in USDJPY once again and this may well extend to fresh lows over this week. I’m still not 100% in favor of robust losses in USDJPY but I do find the alternative structure which would be a recycling of the move down from 94.98 quite a tough call to make. Having said that, I’m not really looking for EURJPY to move below 100 – or not by much – and with the larger picture in EURUSD being bearish it does imply a solid recovery. Still, that’s the background I am working with and we’ll have to judge reactions when they develop.

AUDUSD… maybe in a sideways consolidation. USDCAD also poised between two scenarios. Take care in both of these…

Today’s free analysis is for USDJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+35 pips)

Good luck.
Ian Copsey

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

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