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HARMONIC ELLIOTT WAVE

Monday, September 27, 2010

There’s still some upside in EURUSD and probably GBPUSD… but a correction is due soon…

Apart from screwing up the heading on Friday calling for Dollar strength by the end of the day (and I hope that faux-pas was obvious from the text – as I was thinking of EURUSD) the day developed relatively well. I can’t see that we’ve reached the high in EURUSD but USDCHF may well have seen its low for now. Dollar bearish momentum is beginning to slow and while I remain overall bearish I don’t think it will be too long before we see a slightly deeper correction.

The day looks like starting with a pullback but should finish with the Dollar testing new lows against the Euro and probably Pound too. On USDCHF I am a little more mixed. There are signs that it may have found a temporary low and has already begun its correction. I’m open minded on this but if we do see a new low in USDCHF then it’ll only be marginal.

A bigger confusion comes in the form of USDJPY… Another seemingly BOJ inspired rally but which didn’t reach anywhere close to the 85.92 high and then dropped straight back down to new lows… I am left sitting on the fence between a second move higher back to Friday’s 85.38 high – maybe a touch more – and then lower – and a direct decline back to around the 82.86 low. The moves have been too sharp to be 100% certain of the structure and this leaves the picture wide open. However, I’ll try and highlight the break areas that will indicate which alternative will develop.

However, if I am correct on EURUSD and my outlook on EURJPY then a rising cross is more likely going to require USDJPY to ably assist EURUSD as a move back to around the 114.73 high does appear to be implied. I would actually expect a limited follow-through above also. At that point I feel the cross should fall back lower again.

It’s really hard being bearish AUDUSD as Friday brought a much stronger than expected performance. However, I feel there is still some key resistance levels not too far above current levels that tends to blend in with the expectations for the Europeans.

USDCAD… very balanced. I still have a perverse preference for the upside. In the larger picture I still feel that a breakout from the long 6-month consolidation is due imminently but would prefer for one more correction higher before this develops. However, just be aware that when the pattern breaks lower the move could be quite persistent.

Today’s free analysis is for USDCHF and can be found on http://www.fx-forecaster.com/DailyForecast.html along with Friday's Trader Package Review & Trade Set up report. (+95 pips)

Have a profitable week.
Ian Copsey

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

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