Friday, October 15, 2010

The recycling theory is holding together… but not quite yet confirmed…

The Dollar losses against the Europeans and Aussie have held the critical Dollar support levels to retain the risk of a total recycling of corrections… Working with what I feel should be a Dollar cycle high by the end of next week this still seems to be the best fit. However, at this very point in time I can’t say for certain that reversal higher has yet been confirmed. There are certainly early signs that encourage but not quite definite enough.

So we need to work with this still, exercising some patience to ensure that the anticipated move develops. Now, given the one-week time span the implication is for a long slow grind lower that is likely to be very messy indeed. Therefore, do take care at all times.

AUDUSD… is much the same as the Europeans but I feel there is a slightly stronger argument for losses here which does encourage the bullish Dollar correction more.

If there is any currency pairs that can buck this pattern it is USDCAD and USDJPY… Both still seem to be within bearish structures although within those there is still risk of an initial correction. If anything I feel these may be the better pairs to look for more definite trading opportunities. USDJPY does have a limited downside target which should spurn a deeper pullback although USDCAD appears to have a more persistent downward trajectory. Perhaps the risk here is for some intermediate sideways consolidation on the way.

EURJPY is kinda looking positive but hasn’t quite done enough to be totally confident of the upside. If there is any immediate upside then it’s limited. However, if support caves in then the downside has a deeper potential for a more substantial move.

Finally, if the Dollar recycling fails – by breaks of yesterday’s lows then the rather direct Dollar decline is going to continue – and probably with limited corrections…

Today’s free analysis is for EURJPY and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+85 pips)

Have a great weekend.
Ian Copsey

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

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