Monday, September 20, 2010

The end of the correction?

Friday provided a mish-mash of results although in all three Europeans the final highs came in exactly at one of my highlighted resistances – generally the fallbacks if stronger follow-through was seen. Even USDJPY held the closer resistance but failed to react as strongly as the Europeans…

In particular the peaks in EURUSD and GBPUSD do provide an argument for a Dollar low now in place. Certainly the declines from those two peaks have come with more “impulsive” ratios that indicate a further low once the correction is complete. Quite where this additional low ends and the reaction from there should dictate whether we’re going to see the larger Dollar correction higher will be maintained or, of course, the opposite.

My own preference at this stage is for the Dollar correction to extend higher. I’d actually prefer this for USDCHF to resume the normal correlation with the other Europeans. That has yet to be proven and recently has not really been something on which to rely so we’ll have to take care until there are greater indications but the view for a bullish Dollar overall is the preferred scenario for now. In the long, longer term I remain bearish Dollars so we cannot forget this risk but as mentioned above we’ll have to judge this once the expected declines in EURUSD and GBPUSD are seen.

USDJPY still looks firm, the market perhaps still wary of the BOJ. I do see a higher resistance that may well be tested and would tend to fit into a more bullish medium term outlook. However, I don’t think we’re going to see excessive gains at this point although I do suspect we could retest the 88.11 high at some point. This also fits into a more bullish EURJPY structure as well, but this is where some care needs to be exercised as a slightly deeper correction does seem to be implied in the cross before it can resume gains…

AUDUSD still needs a slightly deeper correction but to be followed by new highs. USDCAD may have found an intermediate low – we’ll have to watch levels here for clues.

Thus, overall I am looking for a mainly mixed day with movements on both sides but with the main emphasis being on lower EURUSD and GBPUSD after deeper corrections higher have been seen and vice-versa in USDJPY. During this period we can then observe how USDCHF develops… My preference is for direct gains… but take care.

Today’s free analysis is for GBPUSD and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+100 pips)

Have a profitable week.
Ian Copsey

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

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