Wednesday, October 6, 2010

The scenic route is climbing its way to the summit…

Well, in EURUSD it is… as for the Dollar it’s taking a look through the cellar door...

I tried to be too clever yesterday with the more complicated correction scenario. In the end the Dollar downtrend resumed directly. I could argue the risk for the correction to recycle back to yesterday’s 1.3639 low, and at the moment it’s still a valid possibility, but looking around the mood remains Dollar bearish and I’ll stick to the more direct attack on targets.

Some while ago I offered some information on the Dow Jones Industrial Average forecasting for a rally to begin. It started very soon afterwards and yesterday stalled marginally below 11,000. Since then its rally has matched that of EURUSD and it appears no coincidence that it is now closing in on an intermediate target between 11,100 and 11,230 from where a correction is due. The correlation does seem persuasive as we are now due to see the Dollar find a low over the next few days. Both Dollar and the DJIA (despite the continued negativity of the core body of traditional Elliotticians) will develop in only as a correction over the next 2-3 weeks. Beyond that the rally in both EURUSD and DJIA should continue.

Back to Forex. Today should begin with a pullback from yesterday’s lows but as long as the recycling doesn’t develop we should see Dollar losses by the end of the day. This does appear to be a common theme across the currency pairs even including EURJPY. I have begun to be a lot more bullish on the JPY crosses and sense we may have seen a major low at 105.42 that should, over the long term, edge its way higher. This implies a less aggressive decline in USDJPY over the coming months.

For now, there is risk of a pullback in USDJPY as well but the original target remains after which my favored outcome is a reversal all the way back to the 85.92 high.

AUDUSD still pointing higher. USDCAD has declared its intention also but take care here as I wouldn’t be surprised to get a second sharp pullback higher…

Today’s free analysis is for USDJPY and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+50 pips)

Good luck.
Ian Copsey

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

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