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HARMONIC ELLIOTT WAVE

Thursday, October 21, 2010

Groundhog Day

The past 2-3 weeks have been somewhat of a recurring nightmare. My long term view is Dollar bearish but feel a correction is due. You may recall my statement some while ago that the problem with this particular part of the wave structure is that corrections can be shallow and look like part of the trend or they can be deeper. Punxsutawney Phil keeps popping his head in and out of his burrow trying to see the light of day and can’t make up his mind…

Yesterday I had seen the peaks in the DJIA, gold and the drop in EURUSD as having a rather enticing correlation but that soon came to an end. Actually, I had a look at those other two yesterday and still feel they should both correct a little deeper though I can’t get particularly bearish as, particularly in the DJIA it is in exactly the same part of its wave structure as EURUSD and therefore has exactly the same dilemma in terms of just how deep it needs correct.

The pullback higher in EURUSD does look quite convincing and I can see an argument for a move back above 1.4100. However, it will then require a correction. I can see an argument for USDCHF to extend losses and the pullback higher in GBPUSD does have a certain depth that threatens to extend…

Having been bitten in the backside a few times over the past few weeks it’s really tough placing much confidence in a groundhog so what I plan to try and describe in today’s analysis is just how things need to develop to confirm further Dollar losses. If it fails then I may just take a shotgun and fly to Punxsutawney… However, the objective is to try and confirm one way or another just whether this Dollar decline has legs to finally follow-through…

Even USDJPY reversed back lower. The problem here is that it could just be part of a complex correction and bounce right back to 81.91-82.34… Again, where the clue may rest is in EURJPY… It bounced earlier than I had expected but does retain the potential for larger losses. In the near-term however, I think perhaps we’re going to exercise some caution until the larger break is seen.

So… today I will approach the market with more caution and will be looking for the right clues to confirm whether I need book my flights for Punxsutawney or whether Phil lives to poke his head out of his cage one more time…

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

Good luck
Ian Copsey

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

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