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HARMONIC ELLIOTT WAVE

Thursday, October 28, 2010

EURUSD moved according to plan… but now can it complete that plan?

Another day of partly good & partly not-so-good. What did work well was EURUSD which maintained the bearish move and bounced from the low end of the target range I highlighted. While I hadn’t expected it yesterday USDCHF bounced from the upper target resistance range also. Of course, GBPUSD ruined the day for the 2nd day in a row…

Today could be a crunch day. The Dollar resistance levels in EUR & CHF are the crucial barriers between continued consolidation and a much deeper Dollar corrective rally. Whatever happens I feel the first move today should be back lower for the Dollar but probably by not too far. I suspect the Dollar upside will come under pressure again and then we’ll have to see how it fairs… It could even go through a sideways move but the end result will come from a break of range. The same will probably be the case with GBPUSD.

For me the Dollar’s downside has more attraction. However, I can see some conflicting indications so will want to watch how the initial moves develop. Even if it declines in accordance with my preference I don’t think it will get anywhere particularly quickly since the EURUSD correction is not yet complete. Even if there is follow-through higher, again I’m not totally convinced that the move will generate a sharp follow-through. Therefore I feel we’re going to need to take care today.

USDJPY maintained its rally and just a little above where I had though it would stall. The short term structure has become a little messy and given we have reached minimum targets we should be more cautious for the next move. My preference is still higher but price can’t really afford to move below yesterday’s corrective low…

So what does this mean for EURJPY? Well, it could extend gains in the first half of the day and then we’ll need to watch here also. Any break much below the low seen overnight would tend to push it down.

AUDUSD is in the same boat as the Europeans. USDCAD has its own boat, doesn’t share it, but does require the same caution as everywhere else…

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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