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HARMONIC ELLIOTT WAVE

Tuesday, September 7, 2010

We should see the Dollar resume its rally against EURUSD… at least…

The market has become terribly disjointed recently with the normal correlation between the 4 majors having dropped considerably. EURUSD & USDCHF have almost been rising & falling in tandem rather than the other way round while the last couple of days has seen EURUSD & GBPUSD suddenly moving of their own accord. This discordance does take away the general comfort of being able to coordinate respective tops and bottoms that adds a dose of uncertainty.

That EURUSD peaked in the 1.2907-21 area does appear to suggest that the correction is done with. This morning’s drop appears to be reflective of this. However, I’m finding it mighty tough to make sense of a similar direct loss in GBPUSD which I feel still needs a little sideways consolidation before it can resurrect the normal EUR/GBP correlation. So from that point of view I think we need take care early in this move. I do feel the losses in both of these pairs will be substantial over the coming week but the early stages still appear to require some degree of choppiness.

For USDCHF… well, I do feel this still has further to decline but probably not quite as deep as I had suggested last week and a larger reversal higher should be expected before too long. The daily bullish divergence is really quite solid now.

USDJPY… still betwixt and between… I can see an argument for direct gains but probably much depends on EURJPY. The cross has also suffered under the weight of this morning’s drop in EURUSD but has met with a key support area. Ideally I’d like to see one more high above 109.55 before it turns lower and remain with the opinion that EURUSD will be the driving force. This tends to argue a more bullish USDJPY but whether this generates a direct move above the 85.90 swing high is yet to be seen… There may still be potential for continued sideways consolidation while the expected (eventual) drop in the cross develops… Thus, this three-way balance still remains rather sensitive.

AUDUSD still looks supported but has a little duality about the near-term. We need to be aware of the critical support here. USDCAD does appear on its way lower but the question is how deep any correction will manage to push higher. It is still within the 5 month sideways consolidation and has further to go before it finally breaks out…

Today’s free analysis is for EURUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with Friday’s Trader Package Review & Trade Set up report. (+15 pips)

Have a profitable week.
Ian Copsey

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

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