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HARMONIC ELLIOTT WAVE

Thursday, September 23, 2010

There is risk of Dollar losses extending today but less aggressively

I guess the answer to yesterday’s question of whether the Dollar downside could extend aggressively was positively answered… So that’s it. The next two years should basically be lower and probably seeing two downward legs separated by a correction. Just looking at the projections of the first rally from 1.1879EURUSD it certainly looks as if this first leg higher can reach close to the 1.6036 high while in USDCHF the 0.9644 historic low is already not a million points away…

Well, that’s getting ahead of ourselves and as normal there will be glitches and complications along the way. Focusing on yesterday’s developments I feel we are still mid-wave and today should see further Dollar losses but not quite so aggressively. At that point I feel there will be more risk of deeper pullbacks towards the next intermediate targets.

Funnily enough, after leading the way for so long in the initial decline GBPUSD has tended to lag behind the Euro. As long as it remains above yesterday’s high by a reasonable margin this should see follow-through higher today as well else extend the sideways consolidation for a longer period.

USDJPY dropped below the key 84.70 support and destroys the immediate bullishness but leaves an air on uncertainty. The sharpness of the recovery from the 82.86 low has hidden the structure so it’s just a bit difficult to establish whether the recovery was a full correction or only part of it. Similar to the Europeans the long term cycles are bearish for the coming 2 years but at this point, while I still acknowledge a potential decline in EURJPY (although there is an argument for it to have found its final low at 105.42) I feel the decline in USDJPY will lag the Europeans.

In the near term I still see another leg higher for EURJPY though yesterday’s high at 113.37 does bring with it the risk of the correction recycling back to 111.46. Therefore I feel we’ll have to remain balanced on USDJPY and prepared to work with breaks.

AUDUSD seems to be finding some sort of barrier as after leading the way against the US Dollar failed to take advantage of the general Dollar bearishness yesterday. While I see a small risk of marginal new highs my preference is more for a correction lower at this time but this does remain mid-rally overall.

USDCAD has become a little whippy. It’s due to break from the massive weekly consolidation at any time. I favor it to be lower…

Today’s free analysis is for EURJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+80 pips)

Good luck.
Ian Copsey

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

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