Wednesday, September 1, 2010

I’m more in favor of the larger correction extending today…

There was a bit of everything yesterday… The Dollar lost out against the Swissie and Japanese Yen but made gains against the Euro and Pound. The Pound even managed to reach fresh lows but there’s something about all of this which smells of confusion – enough to suggest that against the Euro and Pound we are still moving through a complex correction.

Let me cover USDCHF first. 1.0140 has been the long standing target and after a round-about manner of getting there finally managed to hit the bull’s-eye yesterday. I’m obviously delighted to have my target met but have to remain somewhat cautious for a couple of reasons. First of all this is a weekly target involving a pattern that started almost 2 ½ years ago. For price to have settled within 6 points of this is quite unusual. Secondly, while there are is modest confirmation from hourly and daily momentum, the signal is not uniform. There is still some work to be done to have this low confirmed.

EURUSD… bounced nicely from the 1.2607-30 support area outlined yesterday. This looks positive but for the moment looks embroiled in a sideways trading range. Once complete price needs to break higher to generate the next leg higher. In the meantime GBPUSD stalled in a critical support area that would raise the risk of a recycling of the correction back up to the 1.5597 area again. However, we have to be aware of a minor new low before that can happen. These two pairs therefore need to be observed, noting the key supports for them both to react higher…

Then the question is whether USDCHF will remain uncorrelated to its European brethren…

USDJPY moved lower again which was expected but I’m noting a slight compaction in the structure. I remain open to either side but note the monthly, weekly & daily bullish divergences that I continue to feel will limit the downside. I still can’t rule out a marginal new low, and in some ways would suit to generate shorter term bullish divergences, but I feel we should remain aware of the key resistance levels that would imply direct resumption of gains… However, looking at EURJPY I am more in favor of a retest of the 105.42 area but a deeper pullback is due before it can make what I feel will be a final decline… This tends to suggest a weaker USDJPY…

AUDUSD – I still feel this remains in a large sideways consolidation that still needs to edge lower first before recovering. Equally, USDCAD needs a pullback before rallying…

Today’s free analysis is for USDCAD and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+140 pips)

Good luck.
Ian Copsey

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

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