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HARMONIC ELLIOTT WAVE

Thursday, September 30, 2010

I think that’s just about it… We should see the Dollar correct higher…

I was rather surprised with the shallow pullback yesterday but the expected Dollar losses worked perfectly in EURUSD and USDJPY though disappointed in USDCHF. The interesting point about USDCHF is that the 0.9731 support I had been identifying for a while actually held and is a perfectly good alternative. With EURUSD reaching target and AUDUSD also the pointers all round are suggesting that the slightly larger correction should now begin.

It looks like starting out in a fairly conservative way and may just generate what looks like range trading but I feel there should be a stronger reaction by late in the day. By tomorrow I reckon we’ll be in the thick of the move. This tends to suggest a fairly choppy type of correction that may well look pretty complicated for a while but by early-mid next week I feel we’ll complete the move and head lower by the end of next week.

There are possible a couple of exceptions to this. First of all it looks like GBPUSD may be in the middle of a sideways consolidation. I’m just a bit mixed on how long this can last and whether it can synchronize the completion of the correction with those in EUR, CHF & AUD. It’ll be important to understand the type of action that could develop to try and coordinate this against the other Europeans – especially so as it seems like USDCHF has completed one leg of the correction already.

The other exception may well be USDJPY. The bounce from 83.49 was just 2 pips above expectations but does seem to require another return higher before the downside can follow-through. This would seem to be a little earlier that the Europeans but maybe that’s ok as it does seem to be in a slightly different position than the others. I have just one nagging doubt in the back of my head that maybe it will morph into a larger sideways consolidation. I’ll outline the break levels in the analysis.

Another uncertainty is EURJPY. It held yesterday’s key support to push back to its highs and I fancy this a little higher but may well fall short of the 114.73 high. The momentum situation here is looking really stretched with bearish divergences threatening. It’s certainly one that still requires a great deal of vigilance.

Finally, USDCAD did turn into a sideways consolidation. It has just one final dip before the expected follow-through higher. Once this rally stalls the larger risk does appear to be for a break out from the 6-month triangle which should make for a significant move.

Today’s free analysis is for USDCAD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (-20 pips)


Good luck.
Ian Copsey

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