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HARMONIC ELLIOTT WAVE

Thursday, September 16, 2010

There seems to be more risk of consolidation today

OK. Own up. Who let the BOJ know my target was at 82.87? They certainly picked their timing right didn’t they?

All joking aside, the reaction was excellent and even left the 85.22 resistance in its wake. The 85.90 swing high is a little more obvious and one of those that cause the market to wait for the next guy to take the plunge in trying to break the last major high in the sequence of lower highs in the downtrend. I don’t think it’ll happen today but I do feel it will break. It’s just a matter of time to allow a correction to develop and complete…

Having made that call I do have a feeling that this lead by USDJPY into a correction/consolidation may well be followed by the other currency pairs today. There is a risk in one or two for marginal extensions but if they are seen then I don’t think they’ll be too excessive. The rallies in USDJPY, EURUSD and GBPUSD have been sharp enough to cause some jet lag which has forced the market to assess whether this is a total reversal higher or just a correction.

Indeed, that is exactly what’s on my mind. The moves thus far have not quite completed a constructive “impulsive” structure - that is one that indicates potential for a more consistent directional move. It’s most certainly possible but where things stand now it is also the type of move that can also leave the market gasping by a complete reversal. However, at this point momentum is higher across the four majors and this will keep the market from trying to force a reversal. Hence, I feel the risk is for a consolidation…

Perhaps the only exception may well be GBPUSD which appears to be at a slightly different stage and having lagged in the rally now appears to have chance of catching up. However, if gains are seen today then I can’t see them being excessive.

The only possible party pooper I can see is EURJPY. It is hanging in the balance and is sporting a 4-hour bearish divergence but in trying to fit this unexpected reversal higher into a structure I am taken with an eventual move back towards the 114.73 high. This should be handled by USDJPY but the balance I find hard is the anticipated correction in USDJPY and quite what EURUSD does during that time… So as with any period of consolidation do take care…

AUDUSD… has to get above the 0.9456 high to extend its rally else suffer a deeper correction. USDCAD has fallen into a twilight zone where it could move either way though I still have a stubborn preference for the downside…

Today’s free analysis is for USDJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+35 pips)

Good luck.
Ian Copsey

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

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