Thursday, August 26, 2010

There’s a good chance the Dollar should resume gains today

Yesterday went mostly to plan with a couple of exceptions but in some ways these have provided some additional clues to suggest the correction is close to completion.

The only real deviation from the central theme to which I referred to though felt it unlikely was the dip to 1.0247 USDCHF. This was in the target area I outlined if the overall downtrend had any chance of extending further and actually implies a correction to a little higher than current levels before another decline. This is going to conflict with the situation elsewhere with corrective highs expected in EURUSD and GBPUSD that should provoke the next decline.

I am trying to work out how all three can decline. I guess one option is that they do just do that – there’s no rule to say they can’t. However, there may be an alternative that keeps USDCHF in a consolidation while the other two make their moves to a point where they start a deeper correction. It’s possible that USDCHF will take that opportunity to make its final drop. I think the better option for now is to concentrate on EURUSD and GBPUSD and just be aware of how USDCHF reacts.

As for the EURUSD and GBPUSD I do feel we are close to an end to the correction with risk of just a marginal new high before they push lower. This seems to be echoed in EURJPY. The cross actually corrected much deeper than I had been looking for but overall I can account for that but it does appear to be in its final push higher from where we should see losses develop. Equally, as with the main two Europeans I am looking for the decline to extend a bit lower but then provoke a deeper correction. I anticipate the corrections should last 2-3 days to allow losses into the end of next week which should see a more lasting low and a stronger correction higher.

The expected decline in the cross may well put pressure on USDJPY also. It appears to be finding resistance but at this point I feel we shall see a correction only and not a new low. If we do see a new low I don’t expect it to be by too much. The triple (monthly, weekly & daily) bullish divergences should provoke a reaction higher before too long.

That leaves AUDUSD – very much in the same position as the Europeans although it did see a fresh low yesterday. USDCAD may well be in a sideways consolidation and I feel we need watch the retest of Tuesday’s corrective low…

Today’s free analysis is for EURUSD and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+30 pips)

Good luck.
Ian Copsey

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

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