Wednesday, September 22, 2010

Are we on the verge of seeing the Dollar confirming extensive losses?

It’s certainly possible… not quite a certainty but the collapse in the Dollar late in the day has come with quite firm momentum and does threaten to follow-through. There are some potentially positive structures developing also which, if they follow-through, would imply a repeat of the late collapse through today and easily surpass the 1.3333 EURUSD high and 0.9931 USDCHF low.

Even at this point I have all but abandoned any thoughts of new lows in the Euro and could only conceive any repeat of the decline that came from 1.3333 as being the correction recycling. I won’t rule out that chance of a recycling yet though I have to say that it does look less likely all the time.

Therefore, be prepared to hang on to any short Dollar positions but until the resumption of the downtrend is finally confirmed do run a trailing stop.

Yesterday was a day we also saw USDJPY finally break out from its range and is now approaching key support. Will the BOJ continue its support when EURJPY is rising or will it find it hard to justify intervention because of the relative JPY weakness against Europe? I feel the break level is quite clear and this should provide that clue. I will highlight the critical support level in the individual analysis.

What I do note however is that EURJPY still looks bullish. It may occur directly or may just recycle the correction. Certainly the correction was enough but what I have noted is that the normal projections would imply a target a little way above the 114.73 high. This tends to suggest the USDJPY support will hold…

AUDUSD pushed higher also and through my favored 0.9542 resistance target. I am slightly more concerned here as, although hourly & 4-hour momentum still looks bullish, we do still appear to be approaching key resistance levels that would provoke a reasonably deep correction. Watch these target areas closely.

USDCAD has retested the 1.0215 level for a third time and I’m a bit split here. I don’t see the recovery to 1.0349 as being deep enough for this leg of the correction. It could well be that we’ll get a test of the long standing downside target but I’m not that keen on seeing follow-through. There does still appear to be need of a slightly deeper retracement higher before the final break from the long term consolidation.

Today’s free analysis is for USDCAD and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+155 pips)

Good luck.
Ian Copsey

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

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